The two largest publicly traded record and music publishing companies posted stock gains in an otherwise sharp week for the major indexes.
Shares of both Universal Music Group ( UMG ) and Warner Music Group ( WMG ) managed modest gains this week as the companies prepare to release their latest quarterly earnings reports. UMG, which reports earnings on Wednesday (July 24), rose 2.6% to 28.11 euros ($30.61). Year-to-date, UMG shares are up 8.9%.
WMG, which reports earnings on Aug. 8, gained 3.5 percent to $32.00 after being picked up by analysts at Jefferies earlier in the week. Noting that WMG shares are down this year (-10.6% since Friday) and trade at a discount to UMG, Jefferies called WMG's current price “attractive” and believes the company will benefit from its new issues (Zach Bryan, Dua Lipa ) and cost saving measures. Indeed, WMG did well in the first half of the year with the top three tracks in the US, according to Luminate's interim report. Jefferies has a $38 price target on WMG, which represents an 18.8% upside from Friday's close.
The Billboard Global Music Index fell 2.9% to 1,779.41 points, paring the year-over-year gain to 16.0%. In total, nine stocks were gainers, ten were losers and one was unchanged. But the rough week extended far beyond music stocks. The Nasdaq composite fell 3.6% to 17,726.94 as investors dumped tech stocks such as chipmaker Nvidia (down 8.8% this week) and cybersecurity firm Crowdstrike (down 11.1% on Friday thanks to a massive global internet outage), while the S&P .00% fell .25 . to 5,505.00. In the UK, the FTSE 100 fell 1.2% to 8,155.72 points. South Korea's KOSPI composite index fell 2.2 percent to 2,795.46. China's Shanghai Composite rose 0.4 percent to 2,982.31.
Shares of Spotify fell for a second week in a row, falling 2.4% to $295.09. On Thursday (July 18) Guggenheim reiterated a “buy” rating and a $400 price objective. Analysts expect to see some “modest cost savings” from the lower publishing royalties, a move that has sparked controversy in the music industry and drawn the attention of some US lawmakers. Additionally, Guggenheim analysts do not expect a “significant portion” of premium subscribers to switch to the lower-cost “basic” tier after price increases for standard plans. However, investors were not so bullish, and Spotify fell 10.8% below its 2024 high of $331.08 set on June 5.
SiriusXM fell 8.1% to $3.41, bringing its year-to-date loss to 37.7%. This week, Morgan Stanley slightly lowered its forecasts for net additions of satellite radio subscribers in both the second quarter and the full year. SiriusXM, which reports quarterly earnings on Aug. 1, lost 1.4% of its satellite radio subscribers in the first quarter of 2024.
Shares of LiveOne rose 5.7% to $1.49 after releasing a preliminary look at quarterly earnings on Thursday. The music streaming company, which owns Slacker and a majority stake in podcaster PodcastOne, expects fiscal first-quarter revenue to rise 20% to $33.1 million.
K-pop stocks added to their streak of lows this week. HYBE fell 3.8 percent to 182,500 won ($131.31) and extended its year-to-date loss to 21.8 percent. SM Entertainment fell 5.8 percent to 73,300 won ($52.74) and is down 20.4 percent this year despite launching a new joint venture with Kakao Entertainment and overhauling its corporate governance. YG Entertainment lost 8% to 35,250 won ($25.36), bringing its year-to-date decline to 30.7%. JYP Entertainment was an outlier, gaining 2.6% this week to 59,000 won ($42.45), though the stock is still down 41.8% this year.
