XM Satellite Radio

(XMSR)

surged 6% Monday after the satellite radio broadcaster hit its latest subscriber milestone.

The company said it recently surpassed 2 million subscribers, less than two years after its nationwide launch and eight months after it hit the million-user mark.

"The second million is even sweeter than the first," said CEO Hugh Panero. "Our rapid growth in both the retail and automotive markets puts us on our path to reach 20 million subscribers by 2010."

Investors have certainly bought into that pitch over the last year or so, stoking a rally that pushed XM shares up 1,000% in 2003. But with the company and its New York-based rival

Sirius

(SIRI) - Get Report

continuing to suffer massive losses, questions about the companies' valuations have begun to emerge.

The report comes just a month after XM shares slumped in the wake of a mixed first-quarter financial report. Back on May 6, XM posted numbers that hit Wall Street estimates, but the stock dropped after the Washington, D.C., company disclosed that

more users were leaving the service every month than it had said.

XM and Sirius charge $10 and up for monthly subscriptions to their mostly commercial-free radio broadcasts. The programming is broadcast from satellites to special receivers mounted in vehicles or homes.

Bulls believe the medium has nearly unlimited growth potential, and seize on the companies' fast-expanding subscriber rolls as evidence. But bears note these outfits' cash-consuming ways and wonder if the business can ever expand to the point where either company, let alone both, is consistently profitable.

On Monday, XM rose $1.49 to $25.09 and Sirius added a dime to $3.26.