Music stocks suffered their biggest one-week drop in nearly a year as inflation fears gripped markets. In the US, the annual rate of inflation rose to 3.5% in March from 3.2% in February, the Labor Department's Labor Bureau said on Wednesday. This raised concerns that the US Federal Reserve will change its plan to cut interest rates in June. Coupled with rising oil prices and lower-than-expected earnings from banking giants JPMorganChase and Wells Fargo, there wasn't much good news for investors.
Fourteen of the 20 companies on the Billboard Global Music Index lost value this week. The index fell 3.2% to 1,782.67, its biggest one-week decline since losing 4.2% for the week ending July 28, 2023. However, the Billboard World Music Index is up 16.2% year to date and is up 43% over the past 12 months.
Most major stock indexes lost ground this week. In the US, the S&P 500 fell 1.6% to 5,123.41 and the Nasdaq composite fell 0.5% to 16,175.09. South Korea's KOSPI composite index fell 1.2 percent to 2,681.82. China's Shanghai Composite index lost 1.6% to 3,019.47 points. The outlier was the UK's FTSE 100, which improved 1.1% to 7,995.58 points.
Among music stocks, iHeartMedia was the week's biggest gainer after rising 6.3% to $2.18. The improvement came despite a lack of market-moving news or regulatory filings from the radio giant. In fact, the main reason iHeartMedia has been in the news lately hasn't been flattering at all. On March, Forbes reported that iHeartMedia had paid ad revenue from Senator Ted Cruz's podcast, Verdict, to his political action committee (PAC). This led BP America to ask iHeartMedia not to place its ads on podcasts that funnel ad revenue to PACs. Two campaign watchdogs, the Campaign Legal Center and End Citizens United, claim Cruz violated federal law and on Tuesday (April 9) formally asked the Federal Election Commission to investigate.
Hipgnosis Songs Fund, the London-listed music rights investor, improved 5.7 percent to 74 pence ($0.92). HSF has gained 7.2% since the company's board released a damning due diligence report on March 28. Conducted by Shot Tower Capital, the report alleged that the fund's investment manager, Hipgnosis Song Management, overstated revenue and misled investors about the control it had over investments in its portfolio. The board will publish its conclusions on the due diligence report by April 26 and seek shareholder approval of its proposals at an extraordinary general meeting that has yet to be announced.
Sphere Entertainment fell 10.7% to $41.80 this week. On Monday, after Seaport Global downgraded Sphere Entertainment to neutral from a buy rating due to growth concerns, the company's share price fell 3.8% to $45.00. The stock fell another 5.3% on Friday, despite the news or regulatory filings. U2's 40-show residency ended March 2, and the band led Billboard's February Boxscore with $56.5 million from 10 shows. Rock band Phish will play a four-show run at the Sphere in Las Vegas from April 18-21.
Shares in Believe fell 9.8 percent to 14.88 euros ($15.88) after Warner Music Group said on Sunday it would not make a bid for the Paris-listed company. On March 7, WMG revealed its interest in buying Believe and said it would pay “at least” 17 euros per share, well above the 15.00 euros ($16.01) per share offer from a consortium under the leadership of the CEO. Investors immediately bet that WMG's bid would prevail by offering Believe shares at nearly €17. From March 28 to April 2, Believe traded as high as $16.92 and closed above €16.50 from March 25 to April 5. With WMG out of the picture, the consortium's initial offer of €15 per share is the new ceiling.
The index's most valuable companies were relatively mildly down. Universal Music Group fell 2.0% to 27.04 euros ($28.85) and Spotify fell 3.2% to $300.53. Live Nation lost 2.4% to $100.99. CTS Eventim fell 3.8% to 82.00 euros ($87.50). HYBE fell 4.9% to 213,000 won ($154.28). After deciding not to follow Believe, Warner Music Group bucked the trend to rise 0.3% to $33.44.
Quarterly earnings reports will give stocks a chance to rally in the coming weeks. Of the release dates announced so far, Spotify is first out of the gate on April 23rd, followed by Believe on April 24th, Deezer on April 29th, SiriusXM on April 30th, Universal Music Group on May 2nd and the Warner Music Group on May 9.
