The XM Satellite Radio (XMSR) story was generating some static Monday, but investors seem to have honed in on the right signal.

The often rancorous debate centering on the pay-radio broadcaster's growth prospects took a tricky turn around midday. That was when a bogus press release predicting a subscriber-count shortfall appeared on a Yahoo! message board. The release, which purported to come from the company, succeeded in briefly halting the meteoric rise of XM shares Monday.

Lucky for the bulls, the growth worries were squelched later Monday as XM maintained its projections and at least one research shop reassured Wall Street as well. The relief was palpable among investors who have driven XM's stock to a fivefold gain this year and a 50% jump in the last month alone. XM shares closed today up 36 cents, to $16.31.

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The satellite radio story has gained currency as growth-hunting investors have convinced themselves of the mass-market potential for this rather cultish service. The appeal is so strong in some corners that investors hardly blinked last month when money-losing XM said it needed more money to pay for a sooner-than-anticipated satellite replacement.

XM shares hit a 52-week high of $16.90 in early trading Monday as investors took encouragement from the company's continued progress in getting big carmakers such as

Honda

(HMC) - Get Report

and

GM

(GM) - Get Report

to load more of its radios into their vehicles.

As the weak-growth rumors started up later in the morning and were goosed by the fake press release, the stock slipped off track, dropping a dollar. XM's stock is typically one of the most actively traded as the bulls vie with the bears regarding the company's overheated prospects. In fact, with 44 million shares short, accounting for nearly half the float, a great many investors are betting that this stock will come down.

Channel Checks

But after checking with sources, SG Cowen told clients in a note that the rumor appeared to be false. The Cowen team said that after their questions were answered, and anxieties put to rest, they were still expecting 230,000 net subscriber additions in the third quarter. An XM rep said the company is sticking with its projections that call for higher net-add performance and a total subscriber tally of 1.2 million by year-end.

Clear as a Bell
Hearing XM's message

That quieted the XM blowup chatter and eased the stock back above $16 during the afternoon session.

A lesser beneficiary of the premium radio craze has been XM's New York-based rival,

Sirius

(SIRI) - Get Report

. Its rise has been less steep, however, and investors continue to treat it with some wariness after a recapitalization early this year. This month Sirius filed plans that would allow it to raise $500 million through sale of debt or equity.

Washington, D.C.-based XM proved last week that growth stocks can almost always get the financing grease in a rising market. On Thursday, XM said it raised $150 million in a private placement of stock with Legg Mason Capital Management.