Auto investors have been watching the development of driverless car technology closely to identify potential market winners and losers. Intel Corp. (ticker: INTC) announced a $15.3 billion buyout of autonomous vehicle technology company Mobileye (MBLY), sending Mobileye shares soaring nearly 30 percent.
Companies such as Intel, Apple (AAPL) and Alphabet (GOOGL, GOOG) may play as large of a role as Ford (F) and General Motors Co. (GM) in the 21st century auto industry. But while the driverless car era will be a major opportunity for some companies, it may be a significant threat to others. According to Wunderlich analyst Matthew Harrigan, driverless cars may be bad news for radio stocks such as Sirius XM Holdings (SIRI).
In a new research note, Harrigan downgraded Sirius XM stock from “buy” to “hold” and said he sees a “major technology flux” ahead when it comes to in-car entertainment. “More entertainment options in the car, including video and social media, are a clear major priority for both traditional global OEMs and new entrants,” Harrigan says.
Once travelers make the transition from driver to passenger, their entertainment options will no longer be limited to simply listening to the radio.
Sirius and iHeartMedia may soon be fighting off an entire new class of in-car competition from Netflix (NFLX), Google’s YouTube and from Facebook (FB).
Fortunately for Sirius investors, Harrigan says it will be a long time before driverless cars make up the majority of traffic. In the meantime, Sirius is positioned to hang onto its market share.
“SIRI’s [long-term] prospects are, however, well buffered by its engineering development integration with [original equipment manufacturers], large installed base, exclusive sports and talk content rights, and long tail on traditional car ownership,” he says.
Despite the long-term threat that driverless cars may pose, Sirius XM and iHeartMedia’s stocks have been…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
