During a chaotic week for stock markets around the world, Universal Music Group (UMG) shares rose 3.3% to 22.15 euros ($24.20), enough to make the Amsterdam-listed company the best performing music stock of the week.
Stocks were hammered on Monday (August 5) as markets reacted to a disappointing US jobs report last Friday (August 2), leading to growing concerns that the economy could slip into recession. THE Billboard Global Music Index it fell 2.0% on Monday, although it fell more lightly than both the Nasdaq (down 3.4%) and the S&P 500 (down 3.0%). Investors did not panic, however, and markets posted gains for the rest of the week. On Friday (August 9), the Nasdaq closed down 0.2% for the week, while the S&P 500 tumbled.
UMG got a boost Wednesday (Aug. 7) from Warner Music Group's quarterly earnings report — a welcome change after UMG's second-quarter slowdown in streaming growth worried investors so much that the company's shares fell 24% the next day. WMG's latest earnings results, which showed recorded music streaming revenue up 8.7% after some adjustments, may have convinced some UMG investors that they overreacted. In light of this new information, UMG shares rose 6.6% to 22.74 euros ($24.85) on Wednesday. Notably, this Friday's closing price is 14% above the lowest closing price – 21.12 euros ($23.08) – after the 24% drop occurred on July 25.
Shares of WMG rose 0.3% to $28.34 this week after the company said quarterly revenue fell 1% and net profit improved 14%. The third-largest company's streaming earnings pleased some, but not all, analysts. Morgan Stanley analysts cited a “reduced outlook for stream growth” lowering their price target to $35 from $41. Guggenheim, encouraged by WMG's accelerating subscription revenue growth and outperformance over UMG, maintained its $44 price target. JP Morgan, which sees WMG as “well-positioned” to capture paid streaming adoption, left its price target unchanged at $41.
The Billboard Global Music Index, an adjusted measure of the market capitalization of 20 companies, rose 3.1 percent, snapping a streak of four straight weeks of losses. Spotify, the index's biggest component, gained 2.6% to $339.69. Tencent Music Entertainment, which will report earnings on Tuesday (August 13), rose 2.8% to $12.97.
In the UK, the FTSE 100 fell 3.6% to 8,168.10 points. South Korea's KOSPI composite fell 3.3 percent to 2,588.43. China's Shanghai Composite fell 1.5 percent to 2,862.19.
Shares of iHeartMedia fell 10.7% to $1.33 after the company reported second-quarter earnings on Thursday (August 8). The company reported a 1 percent rise in second-quarter revenue and appeared optimistic that political advertising would boost full-year results. Both third-quarter and full-year revenue are expected to increase in the mid-single digits.
Shares of radio station Townsquare Media fell 5.8% after the company's second-quarter results on Tuesday. Revenue fell 2.5% and net loss widened to $48.9 million from $2.7 million in the prior period. Its earnings per share of $0.14 missed the Zacks Consensus Estimate of $0.42.
