Sirius XM (NASDAQ:SIRI) Attracting Bulls Before Earnings Report

With many shareholders and investors highly interested in the performance of Sirius XM (NASDAQ:SIRI), a bullish sentiment has been building for satellite radio company, and if they're able to meet or exceed expectations, Sirius should provide shareholders with a nice jump in share price.

Of course when most analysts are so bullish on a company, as they increasingly are with Sirius, it starts to get a little concerning as to how much is being driven by hype and emotion, rather than the actual performance of the company. We'll all find out soon.

One major challenge Sirius faces is the sustainability of the auto sector, which while seemingly robust, appears to have some cracks in the wall. If the auto sector slows down, so will the growth and earnings of Sirius.

The primary concern to look for as an investor in Sirius is the commodities used by the auto industry and where the prices are going.

At this time commodity prices are rising, which could put pressure on earnings and margins, and ultimately sales of autos.

Secondarily, is the price of oil, which would be a strong psychological barrier to making large acquisitions.

Finally, it's uncertain the percentage of vehicle acquisitions which came from early tax refunds, which could have driven up January sales further than expected. If that's the case, auto sales for the existing quarter could fall, or at least in February and March, which could dramatically affect the performance of Sirius.

In the short term, there's a good chance Sirius will outperform, and that will satisfy the bulls temporarily. Long term, there is a major question because of the vulnerability and exposure Sirius has to the performance of the auto industry, and how sustainable their growth is in that regard.

For now, Sirius shareholders should be rewarded for the performance of Sirius in the last quarter. Going forward, investors interested in Sirius will have to keep a close eye on the auto sector, which is showing signs of price, margins, and earnings pressure.

The fact that General Motors (NYSE:GM) had to offer incentives has also added to the possibility there may be a pricing war in the industry. That could be a positive for Sirius, as it won't matter to the satellite radio company how much consumers pay for a car, as long as they continue to subscribe to their service.

Sirius closed Wednesday at $1.72, gaining $0.09, or 5.67 percent.