The Motley Fool Rule Breakers growth investing service has been making buy and sell recommendations for members since 2004. Now it's time for those members to help shape the service, through the "Take That!" contest currently under way. Readers nominated the companies they thought were no longer Rule Breakers and that should be sold from the scorecard, and the five best bear cases are now up for a vote. The winning (losing!) stock will be revealed in the next issue of Rule Breakers -- and quite possibly a sell recommendation to go along with it!

A year ago, I recommended XM Satellite Radio (NASDAQ:XMSR) to subscribers of our Motley Fool Rule Breakers growth investing service. Even though I would prefer to talk about the two picks of mine that have doubled since being singled out in the newsletter -- wedding-planning site The Knot (NASDAQ:KNOT) and cruise-ship spa specialist Steiner Leisure (NASDAQ:STNR) -- this one has been a dreadful performer. It has shed nearly two-thirds of its value since I gave it the nod.

It hasn't been pretty. XM is still the overall market share leader with 7.2 million subscribers, but the company has let rival Sirius Satellite Radio (NASDAQ:SIRI) close the gap for four consecutive quarters. The boardroom has also suffered a pair of defections, despite the growing popularity of satellite radio.

So is it time to tune out and bail on XM, or is now the time to pump up the volume and take advantage of a lower share price?

We're bullish!
In my original write-up, I liked the company's prospects as it defined a promising era of premium radio. "Yes, terrestrial radio is free," I wrote at the time, "but television subscribers also have rabbit-ear antennas for free, too."

Just as satellite television companies like DirecTV (NYSE:DTV) and EchoStar Communications (NASDAQ:DISH) and regional cable programming providers weaned the public off free broadcast television, I saw the same thing ready to happen to radio. I also appreciated the mostly misunderstood dynamics of the nascent industry with its low variable costs once you got past the huge upfront operating expenses to run a satellite radio business:

The future is bright because this is a highly scalable business. Most of the overhead is fixed, and XM won't have to spend much more to service 20 million accounts come 2010 than the five million it has at the moment. Profitability is still a few quarters away, but once it arrives, the growth there can be dramatic.

I also pointed out other favorable trends like narrowing deficits, its growing fleet of channels (now topping 170), and the potential in both online streaming services and opportunities for sponsor revenue. I knew that this wasn't going to be an overnight success, but I certainly didn't expect the shares to crumble the way they did.

No, we're bearish!
In the "Take That" contest, TAR12 laid out the bear case for XM. He is concerned about the company's lack of profitability, its slow growth relative to its rival, and the viability of satellite radio itself. Quoting his post on the Rule Breakers board:

The only rule that XM is breaking is the one that all businesses need to follow: A business must make profits. And XM is sure breaking this one. It is bleeding cash and paying more and more to acquire new subscribers ... unfortunately at a dismally disappointing rate.

The problem with satellite radio is not the business model or the content. It is the simple fact that the public at large just doesn't want satellite radio. Remember the Buggles? In 1979, their prescience foretold the fate of XM and Sirius: Video killed the radio star.

The market is just not there to turn satellite radio into a truly profitable venture. And that is why XM won't succeed and become wildly -- or even mildly -- profitable. And without profits, or the possibility of profits, XM should be sold.

So which one is it?
This could be a breakthrough quarter for XM -- it's aiming to produce positive cash flow on an operating basis. It will close out the year with at least 7.7 million subscribers, yet Sirius is a lock to close the lead for a fifth consecutive quarter, with 6.3 million projected accounts come January.

XM and Sirius have each publicly discussed a potential combination that would help improve operating margins, but that may be a tough sell in terms of gaining regulatory approval if a deal should ever be struck. As it stands, XM continues to grow on its own, and it even commands a lower market cap than Sirius, though that may not be much of a selling point if XM ultimately hands over the overall market share crown to Sirius.

The community sentiment is largely bearish. According to Motley Fool CAPS data, XM is a one-star stock (out of five possible stars); 220 CAPS players have rated it an "underperform" out of the 464 investors with an opinion on the company.

So ... which one is it? For the full bull and bear XM arguments, and to read the cases against each of the five finalists, click on over to Rule Breakers Central. If you're not a member, you can access the service, read all of our recommendations, and cast a vote in our contest -- all with a completely free, no-strings-attached 30-day trial.

For more coverage: It Might Be Time to Pare Back

Longtime Fool contributor Rick Munarriz is a paying subscriber of both Sirius and XM satellite radio services. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.