Billboard Global Music Index
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K-pop is having amazing charts and sales success and selling out large venues around the world, but the South Korean companies behind those artists are off to a terrible start in 2024.
Through Friday (Feb. 2), four K-pop stocks — HYBE, SM Entertainment, JYP Entertainment and YG Entertainment — have fallen an average of 17% year to date. HYBE, home to BTS and its members’ various solo projects, has had the best performance with a 12% decline, while JYP Entertainment is the worst of the group with a 24.1% loss. Elsewhere, YG Entertainment has lost 14.7% and SM Entertainment is down 17.4%. Korean stocks in general have gotten off to a much better start: Through Feb. 2, the KOSPI composite index of Korean companies increased 5.5%.
Investors may feel K-pop’s finances are less than reliable after news broke this week that Kakao Corp. is auditing SM Entertainment’s financial practices following its acquisition of a 40% equity stake in 2023, according to reports out of South Korea. Kakao’s audio committee is investigating “the appropriateness of investment decisions made by SM management without holding prior consultations with Kakao,” a Kakao official told The Korea Times. For the time being, Kakao is only auditing SM Entertainment’s books, not overhauling its management or considering selling its shares. Amidst heavy media coverage in Korea, Kakao went as far as to issue a statement on Monday (Jan. 29) to dispel rumors it will sell its stake in SM.
Spotify, on the other hand, is soaring ahead of its fourth-quarter earnings report on Tuesday (Feb. 6). The music streaming giant gained 3.8% to $222.31 this week, bringing its year-to-date gain to 18.4%. Spotify shares rose 1.6% on Friday after news broke the company had signed a new distribution deal with popular podcaster Joe Rogan. Spotify will sell ads for and distribute The Joe Rogan Experience on several multiple podcast platforms, according to the Wall Street Journal. So, unlike the previous deal, Rogan’s show will not be exclusive to Spotify and will be available on YouTube and elsewhere.
Although Rogan is no longer exclusive to Spotify, the deal could be extremely lucrative. An upfront minimum guarantee and ad revenue share could be worth up to $250 million, according to the report. While Rogan has proved to be enduringly popular, Spotify kept its relationship with the comedian while maintaining distance from its previous strategy of high-priced, exclusive content deals. Call Her Daddy is no longer exclusive to Spotify, Barack and Michelle Obama departed for Amazon’s Audible, and the former royals, Prince Harry and Meghan Markle, were not renewed.
Investors’ enthusiasm for Spotify hasn’t spilled over to other music streaming companies, however. Abu Dhabi-based music streamer Anghami fell 10.1% to $0.98 this week, bringing its year-to-date decline to 5.8%. Three other music streaming companies also posted losses: France’s Deezer fell 2.3%, U.S.-based LiveOne sank 5.3% and China’s Cloud Music dropped 6.2%. Tencent Music Entertainment, China’s largest music streaming company, rose 0.4%.
The Billboard Global Music Index fell 0.4% to 1,588.68 this week as 13 of the 20 stocks posted losses and only seven stocks finished the week in positive territory. Stocks were broadly up in the United States: the Nasdaq composite gained 1.1% to 15,628.95 and the S&P 500 improved 1.4% to 4,958.61. In the United Kingdom, the FTSE 100 dropped 0.3%. South Korea’s KOSPI composite index gained 5.5%. China’s Shanghai Composite Index sank 6.1% to 2,730.15.
German concert promoter CTS Eventim was the greatest gainer this week with a 4.1% gain. Two other live entertainment companies, Sphere Entertainment Co. and MSG Entertainment, ended the week up 2.8% and 0.7%, respectively.
Among the week’s biggest losers was Hipgnosis Songs Fund, which fell 7.5% to 0.653 pounds per share. Hipgnosis fell 2.5% on Friday after news broke that Merck Mercuriadis is stepping down as CEO of the fund’s investment advisor, Hipgnosis Song Management, and will become chairman. President/COO Ben Katovsky will take over the CEO role.
Spotify shares gained 4.7% to $214.13 this week, helping the Billboard Global Music Index improve 2.3% to a record 1,595.11. Spotify’s fourth consecutive weekly increase came two weeks ahead of its fourth-quarter earnings on Feb. 6, which will show the full impact of its recent price increases in the United States and other major markets.
If a rising tide lifts all boats, Netflix’s superlative fourth-quarter earnings report explains why Spotify shares posted yet another positive week. Netflix shares rose 18.1% to $570.42 this week — including a 10.7% gain on Wednesday alone — after the company said it added 13.1 million subscribers in the fourth quarter, the most since 2020, with revenue up 12.5% to $8.8 billion. Not only was the quarter encouraging for streaming in general, the video streaming giant offered the music business some insights about finding growth in a maturing market: Netflix’s growth hasn’t been hurt by either the company’s constant price increases or its recent efforts to limit password sharing. In fact, pricing played an important part in that growth.
“As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service,” the company stated in a letter to shareholders. Cutting down on password sharing has made an impact, too. Netflix said “millions” of subscribers are using features such as Transfer Profile (a user transfers a profile from a shared account to a new account) and Extra Member (adding a user to an account for $7.99 per month in the United States), and that paid sharing “is now a normal course of business.”
Because of its large market capitalization, Spotify’s gain was a major factor in the Billboard Global Music Index’s 2.3% gain this week. The top-performing music stock of the week was iHeartMedia, which gained 26.7% to $2.85, putting it 68% below its 52-week high of $9.01. Music streaming company LiveOne was another high performer, gaining 13.5% to $1.51. The company announced on Thursday that Podcast One — LiveOne spun off the podcast company and remains a majority owner — reached new agreements with two of its most popular podcasts, The Adam Carolla Podcast and The Adam and Dr. Drew Show. Elsewhere, Sphere Entertainment Co. shares rose 8.7% to $34.45 following the company’s recent hire of Jennifer Koester, a former Google executive, as president of Sphere Business Operations, effective Feb. 5. One of Koester’s duties will be to develop a corporate conference business for product launches and other events.
Eight of the index’s 20 stocks fell this week — although none dropped more than 3%. SiriusXM shares fell 1.5% to $5.34; the company announced Wednesday that it would maintain its quarterly cash dividend at $0.02666 per share. Hipgnosis Songs Fund fell 2.1% to 0.7057 pounds per share amidst multiple regulatory filings that hinted at tension between the company’s new board and its investment advisor, Hipgnosis Song Management. Hipgnosis shareholders will vote on Feb. 7 on a proposal that would result in paying a fee to bidders on its catalog.
Stocks were broadly up in the United States this week as positive economic news made an impact on markets. The tech-heavy Nasdaq climbed 0.9% to 15,455.36 and the S&P 500 rose 1.1% to 4,890.97. Microsoft, Alphabet and Meta reached new highs this week, though Tesla shares fell 13.6% after the company warned vehicle unit sales in 2024 “may be notably lower” than last year. On Friday, Intel shares fell 11.9% after the company offered investors a disappointing outlook for the current quarter during its Thursday earnings release.
On Thursday, the U.S. Department of Commerce’s Bureau of Economic Analysis released data that showed gross domestic product grew at a better-than-expected annualized rate of 3.3% in the fourth quarter of 2023. Then on Friday, the Department of Commerce released data that showed personal incomes ended the year on a high note by increasing 0.3% in December. What’s more, a measure of how much people are spending showed that price increases have slowed. Personal consumption expenditures in December were 2.6% higher year over year (and 2.9% higher excluding food and energy). Last week, new consumer sentiment data showed an improvement in Americans’ feelings about the economy and their expectations for future inflation.
Stocks also improved outside of the United States. In the United Kingdom, the FTSE 100 rose 2.3% to 7,635.09. South Korea’s KOSPI composite index improved 0.2% to 2,478.56. And China’s SSE Composite Index jumped 2.8% to 2,910.22.
Universal Music Group (UMG) shares almost hit an all-time high on Friday, reaching 27.47 euros ($29.98) before closing at 27.22 euros ($29.21), a 1% increase for the week. That was close to the peak of 27.96 euros ($30.52) reached on Nov. 12, 2021, less than two months after the company was spun off from Vivendi, and marked a new 52-week high. The 1% gain followed a 6.9% improvement last week as investors reacted to news that the company expects to lay off staff in the first quarter.
If French music company Believe is taken private, as has been reported, shareholders would expect a premium over the recent share price. That would explain why the company’s share price rose 13.5% to 10.18 euros ($11.11) this week — more than offsetting the 10.5% decline Believe shares experienced last week after news broke of the potential takeover. According to a Reuters report, Believe co-founder/CEO Denis Ladegaillerie and U.S. investment firm TCV have floated the idea to private equity firms.
The S&P 500 rose 1.2% to close at a record high of 4,839.81 on Friday, surpassing the previous peak set two years ago. The Nasdaq didn’t set a record but fared even better, climbing 2.3% to 15,310.97. Stocks in other countries didn’t match the gains in U.S. markets. In the United Kingdom, the FTSE 100 dropped 2.1% to 7,461.93. South Korea’s KOSPI composite index fell 2.1% to 2,472.74. China’s Shanghai Stock Exchange Composite Index sank 1.7% to 2,832.28.
Music stocks were slightly off last week’s record high despite Believe’s double-digit gain and the majority of music stocks finishing the week in positive territory. The 20-company Billboard Global Music Index fell 0.4% to 1,559.48 this week, down slightly from last week’s all-time high of 1,566.45. Twelve of the 20 stocks had gains this week. Other than Believe’s takeover-related jump, the best-performing music stocks had only low, single-digit gains. MSG Entertainment rose 4.1% to 33.48 and SiriusXM improved 4% to $5.42.
The index’s most valuable companies improved slightly: In addition to UMG’s 1% gain, Spotify improved 0.8% to $204.71 and Live Nation climbed 0.6% to $91.18. Those gains were overshadowed by losses by radio giant iHeartMedia, which fell 1.7% to $2.25, and three Asian companies: HYBE, SM Entertainment and Tencent Music Entertainment.
The index’s biggest losers were K-pop companies HYBE and SM Entertainment, which fell 10.9% and 10.3%, respectively. HYBE has been on a roller coaster in January, jumping 9.6% from Dec. 28 to Jan. 11 before falling 14.1% over the next six trading days. SM Entertainment jumped 20.5% from the end of December to Jan. 11 but has only dropped 3.4% from its high point. Another big mover this week was Chinese music streamer Tencent Music Entertainment, which dropped 9.5% to $8.51.
There was good news for all companies on Friday when the closely watched University of Michigan’s Index of Consumer Sentiment jumped 13% in January, its highest level since July 2021. Over the last two months, consumer sentiment has risen 29% and Americans’ expectations for future inflation dropped to 2.9%. Consumer sentiment is now 60% above the all-time low from June 2022 but remains 7% below the historical average.
Music companies will soon announce earnings results for the quarter ended Dec. 31. The first companies out of the gate are SiriusXM on Feb. 1 and Spotify on Feb. 6.
Universal Music Group (UMG) shares rose 3% on Friday — the same day news broke that the company will lay off hundreds of staffers — and finished the week up 6.9% to 26.95 euros ($29.54). The prospect of cost savings made UMG the top-performing music stock of the week, beating French music streaming company Deezer’s 6.5% gain and 6% improvements by both Chinese music streamer Tencent Music Entertainment and live entertainment company MSG Entertainment.
UMG first let investors know it was planning layoffs in its October earnings call. On Friday, a report by Bloomberg said UMG is planning layoffs as early as this quarter, primarily in its recorded music division. A company spokesperson declined to comment on the scope and timetable of the layoffs but told Billboard UMG is “creating efficiencies” in certain areas of the business “so we can remain nimble and responsive to the dynamic market, while realizing the benefits of our scale.” UMG’s stock gained 14.7% in 2023.
Despite no stocks finishing the week with double-digit gains, the 20-company Billboard Global Music Index rose 3.6% to a record 1,566.45 as 12 companies posted gains and eight companies’ share prices declined. Streaming companies led the way with an average gain of 3.9%. Live music companies averaged a 0.7% improvement. Record labels and publishers dropped an average of 1.5%. Radio companies lost an average of 4%.
Music stocks topped the tech-heavy Nasdaq composite, which gained 3.1% to 14,972.76 and easily bested the S&P 500’s 1.8% increase to 4,783.83. In the United Kingdom, the FTSE 100 fell 0.8% to 7,624.93. South Korea’s KOSPI composite index dropped 2.1% to 2,525.05.
The index got a big lift from Spotify’s 4.9% gain to $203.03 this week. Spotify has surged 12.4% since it announced layoffs on December 4 and pledged to operate more efficiently. On Thursday, Spotify closed above $200 for the first time since Feb. 1, 2022. At Friday’s closing price, the stock is up 120.5% in the last 52 weeks.
Live Nation finished the week up 1.6% to $90.66 after Roth analyst Eric Handler upgraded the stock to “buy” and increased the price target from $92 to $114. The $114 price target implies a nearly 26% upside from Friday’s closing price.
Shares of French music company Believe fell 10.5% to 8.97 euros ($9.83) on Friday’s news that the company’s investors were pursuing taking the company private. According to a Reuters report, Believe’s largest shareholders, which includes founder Denis Ladegaillerie and U.S. investment firm TCV, have been working with advisors to gauge the interest of private equity firms. In the first nine months of 2023, Believe, the owner of digital distributor TuneCore and record labels such as PlayTwo and Jo&Co, had revenue of 630.4 million euros ($691 million), up 14.8% year over year.
While other companies in recorded music and publishing posted gains this week, K-pop stocks were down across the board. HYBE’s 2% decline to 247,000 won ($188.05) was the best of the four South Korean music companies. JYP Entertainment fell 8.3% to 96,600 won ($73.54). Two others each dropped 5.9%: SM Entertainment closed at 88,200 won ($67.15) and YG Entertainment finished the week at 43,100 won ($32.81).
Music stocks mirrored the poor start to 2024 seen in markets around the world, but K-pop giant HYBE bucked the trend with a 7.9% gain to 252,000 won ($191.67) this week. HYBE made the news multiple times during a relatively slow, holiday-shortened week — though none of it was the type of financial news that […]
The Billboard Global Music Index — a diverse collection of 20 publicly traded music companies — finished 2023 up 31.3% as Spotify’s share price alone climbed 138% thanks to cost-cutting and focus on margins. Spotify is the single-largest component of the float-adjusted index and has one of the largest market capitalizations of any music company.
The music index was outperformed by the tech-heavy Nasdaq composite, which gained 43.4% with the help of triple-digit gains from chipmaker Nvidia Corp (+239%) and Meta Platforms (+194%). But the Billboard Global Music Index exceeded some other major indexes: the S&P 500 gained 24.2%, South Korea’s KOSPI composite index grew 18.7% and the FTSE 100 improved 3.8%.
Other than Spotify, a handful of major companies had double-digit gains in 2023 that drove the index’s improvement. Universal Music Group finished the year up 14.7%. Concert promoter Live Nation rode a string of record-setting quarters to a 34.2% gain. HYBE, the increasingly diversified K-pop company, rose 34.6%. SM Entertainment, in which HYBE acquired a minority stake in March, gained 20.1%.
A handful of smaller companies also finished the year with big gains. LiveOne gained 117.4%. Reservoir Media improved 19.4%. Chinese music streamer Cloud Music improved 15.8%.
The biggest loser on the Billboard Global Music Index in 2023 was radio broadcaster iHeartMedia, which fell 56.4%. Abu Dhabi-based music streamer Anghami finished 2023 down 34.8%. After a series of large fluctuations in recent months, Anghami ended the year 69% below its high mark for 2023. Hipgnosis Songs Fund, currently undergoing a strategic review after shareholders voted against continuation in October, finished the year down 16.6%.
Sphere Entertainment Co., which split from MSG Entertainment’s live entertainment business back in April, ended 2023 down 24.4%. Most of that decline came before the company opened its flagship venue, Sphere, in Las Vegas on September 29, however. Since U2 opened the venue to widespread acclaim and earned Sphere global media coverage, the stock dropped only 8.5%.
For the week, the index rose 1.1% to 1,534.07. Fourteen of the index’s 20 stocks posted gains this week, four dropped in price and one was unchanged.
LiveOne shares rose 15.7% to $1.40 after the company announced on Friday (Dec. 29) it added 63,000 new paid memberships in December and surpassed 3.5 million total memberships, an increase of 29% year over year. iHeartMedia shares climbed 14.6% to $2.67. Anghami continued its ping-pong trajectory by finishing the week up 16.9%.
Deezer shares fell 6.4% this week after France’s National Assembly approved a 1.2% tax on streaming revenue on Tuesday (Dec. 19). The new tax, which is meant to support local cultural programs, taxes effect in January and will be owed on top of existing tax obligations.
Deezer CEO Jeronimo Folgueira called the tax “the worst possible outcome of all the different scenarios” the company faced from the French government. “Adding taxes is the worst way of trying to support the industry,” he told Billboard. France is Deezer’s home and largest market, accounting for roughly 60% of its revenue in the first nine months of 2023, according to the company’s latest earnings report.
Spotify immediately pulled sponsorship support for two local music festivals to help offset the additional tax burden. France is not as important to Spotify as to Deezer, however, and the new tax was probably not a factor in the 1.3% decline in Spotify’s share price this week. Spotify would be far more affected if other countries followed France’s lead — a possibility raised by Deezer’s Folgueira. “It sets a very dangerous precedent for other markets,” he warned.
SiriusXM investors were unfazed by the news that the New York attorney general’s office had sued the company for allegedly making customers go through a “burdensome” cancellation process. The satellite radio company’s stock finished the week up 1.3% to $5.47 despite a lawsuit that alleges SiriusXM “deliberately wastes its subscribers’ time even though it has the ability to process cancellations with the click of a button.” The company said it will “vigorously defend against these baseless allegations” that “grossly mischaracterize” its practices.
The Billboard Global Music Index fell 0.3% to 1,517.98, lowering its year-to-date gain to 30.0%. Nine of the index’s 20 stocks posted gains this week; 11 stocks ended the week in negative territory.
Shares of streaming company LiveOne gained 10% to $2.21 after the company on Tuesday (Dec. 19) raised its guidance for revenue for its fiscal year ended March 31, 2024, to a range of $118 million to $120 million, up from $105 million to $110 million. The company also said that it’s finalizing a restructuring of its merchandising business, first announced on Dec. 14, that will reduce headcount by 75 to 100 staffers and result in $5 million to $10 million of cost savings.
Three other companies in the Billboard Global Music Index posted gains of 5% or more this week. Sphere Entertainment Co. rose 5.4% to $34.32. Warner Music Group improved 5.1% to $35.29. And K-pop company SM Entertainment gained 5% to 90,100 won ($69.32).
Major indexes fared better than music stocks as investors reacted positively to Friday’s announcement by the Federal Reserve that U.S. prices rose less than expected in November. In the United States, the Nasdaq composite gained 1.2% to 14,992.97 and the S&P 500 improved 0.8% to 4,754.63. In the United Kingdom, the FTSE 100 rose 1.6% to 7,697.51, while South Korea’s KOSPI composite index climbed 1.4% to 2,599.51.
If YG Entertainment’s re-signing of all four BLACKPINK members is any indication, investors can worry less about K-pop companies’ ability to retain their artists.
YG Entertainment gained 17.2% this week to 59,300 won ($45.00) as investors reacted to news that the four members of BLACKPINK signed to new, exclusive contracts with the agency. (The share price rose 29% the morning the announcement was made.) Uncertainty about contract renewals had caused the company’s share price to decline 16% in the week ended Sept. 22, as news reports out of South Korea said three BLACKPINK members would leave YG and spend just six months out of the year with the group. At the time, the company denied the news and insisted that the deals were still being discussed.
The BLACKPINK renewal appeared to have a positive impact on the stocks of other K-pop companies. Shares of HYBE gained 12.3% to 237,500 won ($180.24), while SM Entertainment shares rose 3.6% to 88,200 won ($66.94). Those improvements far exceeded the 0.5% gain posted by South Korea’s KOSPI composite index.
The Billboard Global Music Index gained 2.2% to a record 1,481.56, surpassing the previous high of 1,426.49 set four weeks earlier. That brought the index’s year-to-date gain to 26.9%. Half of the index’s 20 stocks finished the week in positive territory.
This week’s 2.2% gain outpaced major indexes around the world. In the United States, the Nasdaq improved 0.7% to 14,403.97 while the S&P 500 rose 0.2% to 4,604.37, reaching an all-time high of 4,609.23 on Friday (Dec. 8). In the United Kingdom, the FTSE 100 gained 0.3% to 7,554.47.
Spotify was the biggest contributor to the Billboard Global Music Index’s gain this week. The streaming company — the largest component of the 20-company, float-adjusted index — enjoyed a double-digit increase this week, gaining 9.6% to $198.05 after Monday’s news the company will lay off 17% of its workers. Following Thursday’s news that CFO Paul Vogel will leave the company in March 2024, Spotify shares rose 1.1% on Friday.
Another stock to react to financial news was Sphere Entertainment Co., which announced the sale of $225 million in convertible senior notes that mature in 2028. That sent the company’s shares down 15.5%, but the stock recovered most of its losses and finished the week down only 5.3% to $32.66. Following the debt announcement, Sphere Entertainment was upgraded by Seaport to a “buy” with a $38 price target, representing a 16.4% upside over Friday’s closing price. U2 concerts were doing $500,000 more per show than expected and the $99 average ticket price to the Darren Aronofsky film Postcard From Earth was above analysts’ $84 estimate.
The smallest stock on the index, Abu Dhabi-based music streamer Anghami, dropped 41.3% to $1.35 without any regulatory filings or other news. The stock was trading below $1.00 per share as recently as Nov. 15 but jumped to $3.49 on Nov. 21 on trading volume of 57.7 million shares, or about 50 times the daily average.
Shares of iHeartMedia got a boost from the sale of its stake in BMI, rising 7.9% to $3.00 and making the radio giant the best-performing music stock of the week.
The company announced on Monday (Nov. 27) that it expected to receive approximately $100 million from the sale of BMI to New Mountain Capital. With a current market capitalization of just $423 million, the $100 million pre-tax windfall could provide a boost to a stock that has fallen 51.1% this year. iHeartMedia’s announcement said the company plans to use the proceeds for general corporate purposes, “which may include the repayment of debt.” At the 2023 Wells Fargo TMT Summit on Wednesday, CFO Rich Bressler told investors, “You should assume that we will reduce debt with it.”
The BMI sale follows iHeartMedia’s announcement in its third-quarter earnings that it has paid off $519 million of debt since the second quarter of 2022. In the third quarter, the company retired $89 million in principal balance for $65 million cash, according to its Q3 2023 investor presentation. Debt reductions to date are expected to save the company about $43 million in annual cash interest. Additional debt redemptions aided by the BMI sale will further reduce interest expenses and help its bottom line while the advertising market recovers. “I think we’re in terrific shape from the liquidity generation and free cash flow,” Bressler said on Wednesday, “and also in terrific shape to be able to take advantage of opportunities in the marketplace to improve the capital structure.”
The Billboard Global Music Index dropped 0.2% to 1,449.08 as nine of the 20 stocks finished the week in positive territory, 10 stocks posted losses and one was unchanged. Year to date, the index has gained 24.1%.
The week was notable for the unremarkable movements — either positive or negative — in most stock prices. In the absence of earnings results or major news releases, the biggest companies on the Billboard Global Music Index were confined to a narrow band of results. Warner Music Group shares rose 3.8% to $34.59, Universal Music Group gained 1.5% to 24.60 euros ($26.80), Spotify fell 0.5% to $180.75 and Live Nation dropped 3.9% to $84.23.
Anghami, the Abu Dhabi-based music streamer, had the index’s largest drop, diving 18.1% to $2.30. Still, the company’s share price is up 44.2% year to date and has gained 129% since receiving a notification, from the Nasdaq Stock Market in October, regarding its stock’s closing price falling under the $1.00 per share threshold for 30 consecutive days. Companies whose stocks fall below $1.00 for extended periods face being de-listed from the exchange.
While music stocks dropped slightly, some major indexes finished the week at new highs. On Friday, the S&P 500 rose 0.8% to 4,594.63, its highest mark of 2023 and its best showing since March 2022. The Dow Jones Industrial Average, a collection of 30 blue-chip companies, rose 2.4% to a new all-time high of 36,245.50. The Nasdaq composite gained 0.4% to 14,305.03 — nowhere close to its all-time record of 16,057.44 set in 2021 but close to its 2023 high of 14,446.55 set on July 19. In the United Kingdom, the FTSE 100 gained 0.5% to 7,529.35. South Korea’s KOSPI composite index grew 0.3% to 2,505.01.
While most music stocks have posted gains over the last two months, or at least have treaded water, K-pop stocks are floundering in the closing stretch of 2023.
Four South Korean music companies — HYBE, SM Entertainment, YG Entertainment and JYP Entertainment — had an average loss of 13.3% this week and have fallen an average of 21.4% in the last eight weeks. SM Entertainment has performed particularly poorly, falling 29.4% in eight weeks. Those losses occurred despite a rally two weeks ago after South Korean regulators’ ban on short selling until 2024 sparked a surge in the country’s stock prices.
Elsewhere, music stocks are generally surging in late 2023. Non-Korean stocks in the Billboard Global Music Index have gained an average of 9.1% over the last eight weeks. Only two of those 18 stocks — iHeartMedia and Deezer — have suffered double-digit losses, and 11 of the 18 have posted gains over those eight weeks. Companies’ latest earnings reports have been mostly positive. Stocks also reflect both investors’ enthusiasm for music industry trends and larger macroeconomic trends such as a slowdown in inflation and an expectation that central banks will stop hiking interest rates.
While South Korea’s KOSPI composite index has held steady over the last 8 weeks with a 0.2% gain, South Korean music companies have suffered from a string of headline-grabbing news that appears to have dampened demand for their stocks and eroded what were large year-to-date gains. This week, a Kakao executive was arrested for allegedly manipulating SM Entertainment’s stock price to help Kakao beat out HYBE to become the K-pop agency’s largest shareholder. In previous weeks, K-pop stocks faltered when a member of the group EXO broke away from SM Entertainment, and also when G-Dragon, a member of the YG group BIGBANG, was arrested on charges of illegal drug use.
Even after the eight-week decline, the four K-pop companies have an average year-to-date gain of 20.2%. Non-Korean stocks in the Billboard Global Music Index have an average gain of 6% this year (excluding Madison Square Garden Entertainment, which spun off from Sphere in April).
The Billboard Global Music Index rose 2.6% to 1,426.49 this week, falling just 1.4% shy of the all-time high of 1,447.32 set on July 21. The index has had a remarkable three-week run, gaining 9.3% since Oct. 27 and erasing most of a 9.9% decline since the July 21 peak. Its year-to-date gain stands at 22.1%.
Music stocks outperformed many other major indexes this week. In the United States, the Nasdaq composite gained 2.4% and the S&P 500 improved 2.2%. In the United Kingdom, the FTSE 100 gained 2%. South Korea’s KOSPI composite index rose 2.5%.
One of this week’s biggest gainers, iHeartMedia, rose 25.4% to $2.52 after the company announced a multi-year podcast partnership deal with Global, a U.K.-based media company, that will make iHeartMedia’s podcasts available on Global’s podcast player and its digital advertising exchange. Perhaps more importantly, CEO Bob Pittman purchased 100,000 iHeartMedia shares on Tuesday (Nov. 14), according to an SEC filing, at an average price of $2.06 per share. At Friday’s closing price, Pittman’s investment has already gained over 22%.
Abu Dhabi-based music streamer Anghami gained 27.2% to $1.17 — the latest in a series of large fluctuations since September. In October, the company was warned of a potential de-listing for failing to trade above $1. At the time, Anghami shares were trading at $0.82. Over the next five weeks, the share price gained 42.2% without an earnings report, news release or management change that would typically coincide with such a large swing.
Shares of SiriusXM rose 9.7% to $5.08 after Warren Buffett’s Berkshire Hathaway revealed on Tuesday that it purchased nearly 9.7 million shares with a market value of approximately $44 million. Investors pay close attention to the famous stock picker, who is known for seeking undervalued companies with competitive advantages (Berkshire Hathaway has large stakes in Apple, Coca-Cola, Bank of America and Kraft Heinz, among other public companies). In May, Capital One Financial shares jumped 13.5% on news that Berkshire Hathaway bought a $900 million stake.
Warner Music Group fell 2.6% to $31.81 after reporting earnings for its fiscal year on Thursday. Tencent Music Entertainment, which announced it had reached 103 million subscribers in its third-quarter earnings on Tuesday, gained 13.6% to $8.37.
Coming, up German concert promoter CTS Eventim will report third-quarter earnings on Tuesday (Nov. 21).