Sirius XM (NASDAQ: SIRI) posted a yet another set of fantastic quarterly results in the last week of October. But in a surprising turn of events, its shares have plunged by almost 9% since its results release. While some market commenters have blamed its slowing down subscriber growth as the root cause behind its share drop, others feel that its revenue beat probably wasn’t large enough - a really strange justification indeed. But upon closer investigation, it seems like neither of the bear cases holds any real merit. The latest publication of short interest data suggests that the recent correction in Sirius XM shares is nothing more than an irrational market movement that’s disguised as a buying opportunity.
I keep a close eye on FINRA’s bi-monthly short interest data publications. A sharp increase in the metric, for any concerned company, usually indicates that market participants are betting on its stock price to collapse and are initiating short positions in its scrip. Conversely, a sharp decline in the metric generally indicates that bears are closing their short positions as they no longer see a substantial downside in its shares from the current levels. It’s basically a company specific indicator of market sentiment and occasionally provides us with leading insights about where the shares, of any concerned company, could be headed next going forth.