Satellite Radio stocks went on a roller-coaster ride Friday, with industry pioneer XM taking a dive, while rival Sirius gained ground as encouraging comments from execs at an investor meeting Thursday circulated on the Street.
XM tumbled nearly 6% in Friday’s trading — keying off a downward trend in the broader market — to end the day at $8.10. Stock has fluctuated wildly over the past several months, as investors have struggled to get a handle on the future of the nascent business model.
Meanwhile, Sirius shares rallied off recent lows, gaining more than 5.8% to $3.97. According to Bear Stearns satellite analyst Robert S. Peck, the company brass was bullish about progress toward a national rollout of its service at a dinner for institutional investors.
“Investors liked what they heard from top management,” Peck said. “A lot of people are starting to get more comfortable that the technology is ready to go.”
Peck said he expected announcements to that effect in the near future from Sirius’ technology partners, which include automakers, equipment manufacturers and makers of its hardware “chipset.”
Sirius has done a limited launch of its service, which offers 100 channels of digital-quality music, news, sports and talk radio for $12.95 a month, and expects to go nationwide by July. XM, which launched nationally late last year with a similar but slightly cheaper offering, has been adding subscribers at a brisk pace, with nearly 80,000 at last count.
But concerns have persisted on Wall Street as to whether these companies can build enough critical mass to make it to break-even before they run out of operating cash.
In a somewhat ominous nod to potential future funding concerns, Sirius on Friday said it had expanded the number of shares it is authorized to issue from 200 million to 500 million. Company currently has just over 160 million shares out.