Live Nation Shares Up 7% After Record Quarter, Universal Music Shares Gain on Earnings & TikTok Renewal
Written by djfrosty on May 3, 2024
Shares of Live Nation jumped 7.2% to $94.66 on Friday following the company’s earnings report on Thursday (May 2), which showed the concert promotion and ticketing giant had a record first quarter. Revenue of $3.8 billion was up 21% year over year, and the company said it expects strong results in 2024 from its arena and high-margin amphitheater businesses.
Investors may have been encouraged by Live Nation’s insistence during Thursday’s earnings call that the U.S. Department of Justice does not pose a mortal threat to the company. Commenting about an April 16 Wall Street Journal article about a pending DOJ lawsuit, president and CFO Joe Berchtold dismissed the notion that regulators could force Live Nation to sever its concert promotion and ticketing businesses. “Very little of the conduct the DOJ has raised with us relates to the combination of ticketing and promotion resulting from the merger,” he said. “And most of what does was anticipated and addressed by the consent decree allowing the merger to go forward.
“Based on the issues we know about,” Berchtold added, “we don’t believe a breakup of Live Nation and Ticketmaster would be a legally permissible remedy.”
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Live Nation hasn’t fully recovered since news of a pending DOJ lawsuit broke. Through Wednesday (May 1), Live Nation shares had lost 11.5% since the WSJ article. Friday’s 7.2% gain helped Live Nation recover nearly half of that loss.
Numerous analysts see upside in Live Nation’s stock. On Tuesday, Deutsche Bank initiated coverage of Live Nation with a $120 price target and a “buy” rating. Following Thursday’s earnings release, Jefferies upped its price target to $115 from $114, Wolf Research raised its price target to $131 from $128, and Benchmark increased its price target to $132 from $130. CFRA downgraded Live Nation to “hold” from “strong buy,” however, and lowered its price target to $105 from $120.
Live Nation was one of the best-performing music stocks in a week the vast majority of them posted gains. Seventeen of the index’s 20 stocks gained ground this week, helping the Billboard Global Music Index improve 3.8% to 1,824.29 and nearly match the all-time high of 1,841.66 reached four weeks ago. Two stocks — Abu Dhabi-based music streamer Anghami and New York-based label and publisher Reservoir Media — posted losses and one stock, French music company Believe, was unchanged.
Universal Music Group shares climbed 4.9% to 28.92 euros ($31.16) following its first-quarter earnings release on Thursday and its announcement of a renewed licensing deal with TikTok. UMG’s earnings rose 6% (8% at constant currency) to 2.59 billion euros ($2.8 billion) and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved 13.2% to 591 million euros ($640 million).
K-pop company SM Entertainment was the week’s best performer after gaining 5.9% to 85,800 won ($63.27). Warner Music Group rose 5.4% to $34.14. iHeartMedia climbed 5.1% to $2.25. Cumulus Media gained 2.6% — and rose 4.2% on Friday — after its first-quarter earnings showed its 2.7% decline in revenue, to $200 million, was in line with previous guidance.
SiriusXM shares improved 3.3% to $3.12 this week despite falling 7.2% on Monday after its first-quarter earnings report showed the company’s self-pay subscribers dropped by 1.4%. Many analysts cut their price targets in the wake of the earnings. Barrington dropped SiriusXM to $4.75 from $5.75 and maintained its “outperform” rating. Deutsche Bank lowered its price target to $3.75 from $5 and kept its “hold” rating. Goldman Sachs dropped its price target to $3.25 from $3.50 and upgraded its rating to “neutral” from “sell.”