Universal Music Group (UMG) shares rose 4.9% on Thursday (Feb 29), the day after fourth-quarter earnings revealed record revenue of 11.1 billion euros ($12 billion) in 2023 and strong growth that related to subscriptions in the fourth quarter. The music giant's stock ended the week up 2.3 percent at 27.87 euros ($30.25), extending its year-to-date gain to 6.8 percent.
Investors also received details on the financial impact of UMG's layoffs across the company. The global headcount reduction is expected to save 75 million euros ($81.3 million) in 2024, 125 million euros ($135.5 million) in 2025 and 250 million euros ($271 million) annually by 2026. UMG has not specified the number of employees who will be fired away, but Advertising sign it had identified nearly 50 across the company by Friday afternoon (March 1). A second phase of layoffs and “other operating results” is planned to begin in 2025 and run through 2026, according to UMG's latest investor presentation.
By reducing its workforce and eliminating some positions, UMG is “reengineering our organization to strengthen our capabilities in the areas most critical to our future growth and success,” CFO Boyd Muir he said during the earnings call on Wednesday (February 28). “These changes will strengthen our leadership team, enhance innovation and create significant efficiencies across our business.”
Also making gains this week were some of the other biggest companies on the 20-member Billboard Global Music Index. Spotify rose 3.0% to $263.75, Warner Music Group improved 3.2% to $35.48 and Live Nation rose 1.9% to $97.15. The index itself rose 1.9% to 1,715.81 points, with 11 stocks in positive territory.
Stocks had another strong week in the United States overall. On Friday, the Nasdaq composite surpassed its previous high since 2021 and ended the week up 1.7% at 16,274.94. Chipmaker Nvidia rose 4.4% to $822.79 this week, after rising 8.5% last week. Shares of Meta rose 3.8% to $502.30 after announcing Thursday that it would “remove” (meaning remove) the Facebook News tab in the United States and Australia. The S&P 500 gained 0.9% to 5,137.08 — its first close above 5,100.
In the UK, the FTSE 100 fell 0.3% to 7,682.50. South Korea's KOSPI Composite fell 0.9% to 2,642.36, reflecting declines in K-pop companies HYBE (down 7.6%), SM Entertainment (down 2.5%), JYP Entertainment (down 3 .4%) and YG Entertainment (down 9.9%). China's Shanghai Composite rose 0.7 percent to 3,027.02.
Sphere Entertainment Co. was the biggest music gainer of the week, as its share price rose 8.4% to $44.29. The price jumped 6.2% on Thursday after the SEC filing revealed by the chairman/CEO James Dolan acquired an additional 59,000 shares, ranging from $40.48 to $41.46 per share. Less affected the share price TMZNews that the Eagles are in talks for a fall home at the $2.3 billion Sphere in Las Vegas. After U2's residency ends this weekend, the Sphere will host Phish for four dates in April and Dead & Company for 24 dates spanning May 16th through July 13th. Shares of Sphere have gained 30.3% year to date.
French music streamer Deezer was the week's next best performer after gaining 5.1% to 2.25 euros ($2.44). The company reported fourth-quarter earnings on Thursday, which showed improvements in subscriber court and average revenue per user. Revenue of 130.7 million euros ($141 million) was up 12.1 percent from the same period last year. On the same day, Deezer also announced the departure of the CEO Jeronimo Folgueira. “Deezer is back on track and can now build from a strong foundation,” the president said Iris Knobloch.
Shares in Believe rose 4.2 percent to 15.50 euros ($16.82) after the French music label said it had received interest from a third party. joint venture consisting of a founder Denis Ladegaillerie and two major shareholders made a bid in February to take the company private at €15.00 per share. On Friday, Believe revealed it had received “a confidential exploratory non-binding approach” from another party that valued the company at “at least” 17.00 euros ($18.45) per share. Believe was careful to note that the third party approach was not an obligation to submit an offer. However, the emergence of another potential bidder was enough to push Believe's share price above the consortium's previous offer of €15.00 per share.
Shares of Chinese music streamer Cloud Music fell 0.5 percent to HKD 90.45 ($11.55). The company said Thursday that music subscribers rose 8.7% to 205.9 million in the fourth quarter, with subscription growth helping online music service revenue rise 17.6% to RMB 4.4 billion ($611 million) — although total revenue fell 12.5% to RMB 7.78 billion ($1.09 billion). Gross profit improved 63% to RMB 2.1 billion ($292 million) and net profit improved to RMB 818.5 million ($114 million) from a net loss of RMB 114.6 million ($16 million) in 2022.
Shares of iHeartMedia fell 2.6% to $2.26 after a wobbly week for the nation's top radio station. The stock rose 22.0% to $2.77 on Thursday after the company's fourth-quarter earnings report suggested the fog may be lifting from an advertising slowdown that has hurt broadcast revenue. After fourth-quarter revenue fell about 5%, iHeartMedia's first-quarter revenue is expected to decline 2% flat. Podcasts were a bright spot, up 16.6% in the fourth quarter and 13.8% for the full year. Almost all of Thursday's gain was erased on Friday, however, when shares of iHeartMedia fell 18.4%.
Cumulus Media suffered the biggest loss among music stocks after falling 20.4% to $3.74. On Tuesday (February 27), the broadcaster said its 2023 revenue fell 11.4% to $844.5 million and announced a debt swap offer that would allow lenders to swap 6.750% bonds due 2026 for 8.750 % bonds due 2029. The company is also offering to exchange term loans under the 2019 credit facility for new term loans.
