MP3.com stockholders and CEO Michael Robertson sang a happy tune yesterday as shares in the embattled music Web site crescendoed 45 percent on the news the company is days away from settling a copyright lawsuit with Warner Music Group.
The stock rose $5.25 to $16.88 – on volume that was more than five times its daily average.
The stock peaked earlier in the day at $17.
Industry insiders insist the settlement, which could be announced as early as Friday, came much earlier than expected – but could prove to be a welcome sign of relief for the site, which is under fire for copyright infringement.
“Things look great for MP3.com,” said analyst David Bench of Arhold & S. Bleichroeder, who believes the Internet company should trade at $30 per share by next year.
Bench says the possible settlement, which would be the first by a major record label following MP3.com’s court loss in April, should pressure the remaing labels to ink a deal as soon as possible.
“We believe that this potential agreement is an important step for the company to a comprehensive settlement between MP3.com and all five major recording labels,” Bench said.
If the terms of the deal mirror the early reports of the settlement – which call for MP3.com to pony up $15 million to $20 million to settle the copyright infringement claims with Warner Music – Bench says MP3.com “would still have over $250 million in cash on their balance sheet with a burn rate of less than $20 million per year.”
Phil Leigh, an analyst at Raymond James, also says that “predicated on the assumption the settlement gets signed, shares in MP3.com could still go up.”
The five major labels – Warner, EMI, Sony, Universal, and BMG – had no comment on the pending settlement.