Music Stocks
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Live Nation shares gained 4.0% to hit $103.77 this week, marking the stock’s best closing price since May 2, 2022, and the first time the concert promotion giant had five straight closes above $100 since late April and early May that same year.
Other music stocks didn’t fare as well. Most of the 20 companies in the Billboard Global Music Index dropped this week, with 13 stocks losing ground and just seven finishing the week in positive territory. The index fell 0.1% to 1,697.90, marking the first time it’s decreased in successive weeks since it fell during three consecutive weeks in October 2023. Multi-week declines are rare for the index: Since the beginning of 2023, it has had just two two-week declines, two three-week declines and one four-week decline (in July and August 2023). This week’s slight drop brought the index’s year-to-date gain to 10.8%.
In a relatively quiet week free of earnings releases or market-moving news, there was roughly an even mix of gains and losses from the most valuable companies. Universal Music Group increased 2.1% to 27.32 euros ($29.77) while Spotify dropped 1.7% to $254.89 and Warner Music Group (WMG) fell 2.9% to $32.94. Elsewhere, German promoter CTS Eventim rose 2.1% to 76.70 euros ($83.56) and reached a new 52-week high of 77.80 euros ($84.76).
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K-pop companies rebounded after a string of weekly declines. HYBE improved 2.3% to 199,000 won ($149.59) and SM Entertainment climbed 2.5% to 74,900 won ($56.30). YG Entertainment jumped 6.3% to 43,050 won ($32.36) but is still down 19.6% year to date.
French indie music company Believe finished at 15.52 euros ($16.91), still well above the 15.00 euros ($16.34) tender offer by a consortium that seeks to take the company private. WMG has expressed interest in Believe at 17.00 euros ($18.52) per share.
The companies with the largest gains and losses are among the least valuable on the index. The week’s greatest gainer was Abu Dhabi-based music streamer Anghami, which rose 15.6% to $1.11 and has a market capitalization of just $30.7 million — less than 0.1% of Spotify’s. Radio broadcast giant iHeartMedia and French music streamer Deezer had the index’s biggest losses of 10.0% and 10.3%, but iHeartMedia’s market cap is only $255 million while Deezer’s is about 245 million euros ($267 million).
The index’s four live music stocks had an average gain of 0.9% this week, topping the 0.4% gain of the seven record label and publishing stocks. Five streaming stocks averaged a less than 0.1% decline. Three radio companies — iHeartMedia, Cumulus Media and SiriusXM — had an average decline of 5.1%.
Key U.S. indexes also saw small declines this week. The Nasdaq composite fell 0.7% to 15,973.17. The S&P 500 fell 0.1% to 5,117.09. In the United Kingdom, the FTSE 100 gained 0.9% to 7,727.42. South Korea’s KOSPI composite index declined 0.5% to 2,666.84. China’s Shanghai Composite Index grew 0.3% to 3,054.64.
(WMG) revealed its interest in acquiring the French music company.
Believe shares rose 2.5% to 15.88 euros ($17.38) after WMG announced its interest in the owner of distributor TuneCore, publishing administrator Sentric and such record labels as Naïve and Groove Attack. Last week, Believe announced it had interest from an unnamed party, which caused the share price to exceed the 15 euro ($16.52) per share offer from a consortium led by CEO Denis Ladegaillerie and investment funds EQT and TCV. After the potential suitor was given a name, Believe’s share price rose even more. WMG, which hasn’t made an official offer, said it would pay “at least” 17 euros ($18.60) per share. WMG shares fell 4.4% to $33.93 this week.
With Believe trading at 15.88 euros ($17.38), investors don’t appear convinced that WMG will make an offer at 17.00 euros. Not only would WMG need to pass regulatory scrutiny, the Ladegaillerie consortium has a head start and appears to be moving quickly to close the deal. Last week, the consortium said it waived the board’s condition that an independent expert weigh in on its offer’s fairness to shareholders. WMG’s announcement singled out the maneuver, stating that “WMG considers that such a waiver violates a number of rules of French securities regulations which are meant to protect shareholders (including the sellers and their investors) and the Company, and that the validity of such waiver could be challenged.”
Sphere Entertainment Co. shares rose 10.1% this week to $48.77, adding $127 million to the company’s market capitalization and bringing its year-to-date gain to 43.5%. Three of four live music companies posted gains in an otherwise muted week for music stocks: German promoter CTS Eventim gained 2.2% to 75.10 euros ($82.19), while on Thursday (Mar. 7), Live Nation shares surpassed $100 for the first time since May 2, 2022. The concert giant finished the week up 2.7% to $99.75.
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The 20-company Billboard Global Music Index fell 0.9% to 1,700.37 this week as half the stocks were gainers, nine were losers and one was unchanged. Streaming stocks had an average gain of 4.2% thanks to an 18.4% improvement by music streamer LiveOne. Abu Dhabi-based streaming company Anghami rose 3.2%. The bigger streaming companies lost ground, however. Spotify fell 1.6% to $259.40, a rare stumble for a stock that has gained 38.1% year to date. Deezer shares dropped 0.4% to 2.24 euros ($2.45).
K-pop stocks were down across the board this week. JYP Entertainment, home to Twice and Stray Kids, fell 8.0%. SM Entertainment, home to aespa and Girls’ Generation, dropped 6.5%. HYBE sank 2.3% and YG Entertainment, the company behind BLACKPINK, slipped 1%. The four companies have an average year-to-date loss of 22.7%. HYBE’s 16.7% decline in 2024 is the best of the group. Elsewhere, JYP Entertainment shares have fallen 33.1% and SM Entertainment and YG Entertainment dropped 20.6% and 20.4%, respectively.
Stocks were mixed globally. In the United States, the Nasdaq composite dropped 1.2% to 16,085.94 and the S&P 500 declined 0.3% to 5,123.69. U.S. stocks reached new records on Thursday following comments by Federal Reserve chief Jerome Powell that indicated the central bank will ease interest rates. “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell told the House Committee on Financial Services on Wednesday (Mar. 6).
Stocks ended the week on a down note after Friday’s U.S. jobs report offered mixed messages to investors. Total confirmed payroll rose by 275,000 in February, but at the same time, the unemployment rate rose by 0.2 percentage points to 3.9% and wages rose just 0.1% in February — not necessarily welcome indicators, but perhaps signs that the Federal Reserve can move ahead with future rate cuts without fearing the economy will overheat.
In the United Kingdom, the FTSE 100 fell 0.3% to 7,659.74. South Korea’s KOSPI composite index rose 1.4% to 2,680.35. China’s Shanghai Stock Exchange index improved 0.6% to 3,046.02.
Universal Music Group (UMG) shares rose 4.9% on Thursday (Feb. 29), the day after its fourth-quarter earnings revealed record revenue of 11.1 billion euros ($12 billion) in 2023 and strong subscription-related growth in the fourth quarter. The music giant’s stock finished the week up 2.3% to 27.87 euros ($30.25), bringing its year-to-date gain to 6.8%.
Investors also received details about the financial impacts of UMG’s company-wide layoffs. A reduction in global headcount 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 being laid off, but Billboard had identified nearly 50 across the company by Friday afternoon (Mar. 1). A second phase of layoffs and “other operational efficiencies” is scheduled to begin in 2025 and run through 2026, according to UMG’s latest investor presentation.
In reducing its headcount and eliminating some positions, UMG is “redesigning our organization to enhance our capabilities in the areas most critical to our future growth and success,” CFO Boyd Muir said during the earnings call Wednesday (Feb. 28). “These changes will strengthen our leadership team, foster innovation and create significant efficiencies across our business.”
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Also enjoying gains this week were some of the other largest companies in 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 increased 1.9% to $97.15. The index itself rose 1.9% to a record 1,715.81, 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 from 2021 and finished the week up 1.7% to 16,274.94. Chipmaker Nvidia rose another 4.4% to $822.79 this week after gaining 8.5% the previous week. Meta shares were up 3.8% to $502.30 following its announcement on Thursday that it will “deprecate” (i.e. remove) its Facebook News tab in the United States and Australia. The S&P 500 gained 0.9% to 5,137.08 — its first close over 5,100.
In the United Kingdom, the FTSE 100 fell 0.3% to 7,682.50. South Korea’s KOSPI Composite index fell 0.9% to 2,642.36, mirroring the declines of K-pop companies HYBE (down 7.6%), SM Entertainment (down 2.5%), JYP Entertainment (down 3.4%) and YG Entertainment (down 3.9%). China’s Shangai Composite Index gained 0.7% to 3,027.02.
Sphere Entertainment Co. was music’s greatest gainer of the week after its share price rose 8.4% to $44.29. The price jumped 6.2% on Thursday after an SEC filing revealed chairman/CEO James Dolan acquired an additional 59,000 shares, ranging from $40.48 to $41.46 per share. Less impactful to the share price was TMZ‘s news that the Eagles are in talks for a fall residency at the $2.3 billion Sphere in Las Vegas. After U2’s residency ends this weekend, Sphere will host Phish for four dates in April and Dead & Company for 24 dates spanning from May 16 to July 13. Sphere shares have gained 30.3% year to date.
French music streamer Deezer was the next-best performer of the week after gaining 5.1% to 2.25 euros ($2.44). The company reported fourth-quarter earnings on Thursday that showed improvements in subscriber court and average revenue per user. Revenue of 130.7 million euros ($141 million) was up 12.1% from the prior-year period. The same day, Deezer also announced the departure of CEO Jeronimo Folgueira. “Deezer is back on a growth trajectory and can now build from a solid foundation,” said chairwoman Iris Knobloch.
Believe shares rose 4.2% to 15.50 euros ($16.82) after the French music company announced that it received interest from a third party; a consortium consisting of founder Denis Ladegaillerie and two major shareholders launched a bid in February to take the company private at 15.00 euros per share. On Friday, Believe revealed it 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 the third party’s approach did not constitute an obligation to make an offer. Still, the appearance of another possible bidder was enough to push Believe’s share price above the consortium’s earlier 15.00 euros-per-share bid.
Shares of Chinese music streamer Cloud Music dropped 0.5% to 90.45 HKD ($11.55). The company announced Thursday that music subscribers grew 8.7% to 205.9 million in the fourth quarter, with subscription growth helping revenue from online music services increase 17.6% to 4.4 billion RMB ($611 million) — although total revenue fell 12.5% to 7.78 billion RMB ($1.09 billion). Gross profit improved 63% to 2.1 billion RMB ($292 million) and net profit improved to 818.5 million RMB ($114 million) from a net loss of 114.6 million RMB ($16 million) in 2022.
iHeartMedia shares fell 2.6% to $2.26 after a seesaw week for the country’s leading radio broadcaster. The stock rose 22.0% to $2.77 on Thursday after the company’s fourth-quarter earnings report suggested the fog might be lifting from an advertising slowdown that has hurt broadcast radio revenues. After fourth-quarter revenue fell about 5%, iHeartMedia’s first-quarter revenue is expected to be down 2% to flat. Podcasts were a bright spot, growing 16.6% in the fourth quarter and 13.8% for the full year. Nearly all of Thursday’s gain was erased on Friday, however, when iHeartMedia shares fell 18.4%.
Cumulus Media suffered the largest loss amongst music stocks after falling 20.4% to $3.74. On Tuesday (Feb. 27), the radio broadcaster said its 2023 revenues fell 11.4% to $844.5 million and announced a debt exchange offer that would allow lenders to swap 6.750% notes due 2026 for 8.750% notes due 2029. The company is also offering to exchange term loans under a 2019 credit facility for new term loans.
Cumulus Media led all music stocks this week by gaining 20.2% to $4.70 after the radio broadcaster announced it had employed a “poison pill” to ward off a Singapore-based investor.
In January, Renew Group Private Ltd increased its stake in Cumulus Media from 5.2% to 10.01%. To protect the best interests of all Cumulus shareholders, the board of directors explained, the company chose to enact a “limited-duration shareholder rights plan” that would dilute Renew Group’s equity if it exceeds a 15% stake. In justifying the move, Cumulus said Renew Group has investments in other media companies, including a direct competitor to Cumulus.
Music stocks were broadly up this week as the Billboard Global Music Index improved 1.5% to a new high of 1,684.49. The index is up 9.8% in the young year and has gained 38.4% over the past 52 weeks. Of the index’s 20 stocks, 13 finished the week in positive territory, six lost value and one was unchanged.
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Stock markets around the world reached new highs this week, too. In the United States, the Dow reached a new closing high of 5,088.80 on Friday (Feb. 23) after surpassing 5,100 for the first time earlier in the day. The Nasdaq composite also reached a new high on Friday and finished the week up 1.4% to 15,996.82. The S&P 500 improved 1.7% to a new closing high of 5,088.80. Japan’s Nikkei 225 index reached an all-time high on Thursday (Feb. 22), finally surpassing the previous record reached in 1989 when the Japanese economy was the world’s envy.
Music streamer LiveOne was the second-best performing music stock of the week after its shares jumped 17.9% to $1.71, bringing its year-to-date improvement to 22.1%. With no other music stocks posting double-digit gains, the next best performance came from Chinese music streamer Cloud Music. Its shares rose 4.1% to 90.95 HKD ($11.63) as Chinese stocks finished the week strong after hitting a five-year low in February. In an attempt to bolster the market, Chinese regulators this week established trading restrictions such as limits on short-selling and institutional investors.
Spotify shares gained another 4.0% this week to close at $256.10, bringing its year-to-date gain to an impressive 36.3% (which has added approximately $13.4 billion to its market capitalization). On Wednesday (Feb. 21), the company announced the creation of a new music advisory agency, AUX, that will connect brands with artists. The inaugural campaign matches Coca-Cola with DJ-producer Peggy Gou in what the company called “a long-term partnership that will span live concerts and events, social media content, a branded playlist, and on-platform promotional support.”
Live Nation shares finished the week up 2.2% to $95.32 and rose 2% on Friday following the company’s encouraging fourth-quarter earnings release. Morgan Stanley raised its price target from $110 to $120 in part because Live Nation said it expects double-digit growth in adjusted operating income in 2024 thanks to a busy touring schedule in its high-margin amphitheaters. “This is going to be a great year,” president/CEO Michael Rapino said during Thursday’s earnings call.
Radio broadcaster iHeartMedia was the index’s biggest loser of the week after dropping 12.5% to $2.32. The company will announce its results for the fourth quarter of 2023 on Feb. 29.
Believe’s share price jumped 19.2% to 14.78 euros ($15.93) this week following Monday’s news that a consortium including founder/CEO Denis Ladegaillerie plans to take the company private at 15.00 euros per share. The scant difference between the offer price and Friday’s closing price suggests investors believe Ladegaillerie, along with investment funds EQT and TCV, is likely to get the deal done.
“Believe has a significant opportunity ahead to consolidate the independent music market and create the first global major independent,” Ladegaillerie said in a statement. But the consortium, which has 71.9% of outstanding shares, has a good distance to go. After the group obtains a 75% stake through already agreed-upon transactions with some shareholders, it will acquire regulatory approvals and the opinion of an independent expert before making a tender offer for the remaining shares.
The Billboard Global Music Index rose 1.4% to a record 1,659.96 as 13 of the index’s 20 stocks finished the week in positive territory. That brought the index’s year-to-date gain to 8.2%. Over the last 52 weeks, the index is up 29.4%.
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Thanks to Believe’s double-digit gain and improvements from some large companies such as Live Nation, CTS Eventim and Spotify, the Billboard Global Music Index outperformed many other indexes around the world. In the US, the Nasdaq composite and the S&P 500 declined 1.3% and 0.4%, respectively. South Korea’s KOSPI composite index rose 1.1% to 2,648.76. In the United Kingdom, the FTSE 100 gained 1.8% to 7,711.71.
U.S. stocks had an off week, rocked by news on Tuesday (Feb. 13) that U.S. prices rose 0.3% in January. That led investors to flee from stocks for fear that the higher-than-expected inflation figures would cause the Federal Reserve to keep interest rates high to cool the economy. Then on Thursday (Feb. 15), numbers from the U.S. Census Bureau showed that retail sales fell 0.8% in January, worse than the expected 0.3% decline and well below December’s 0.4% gain.
Spotify gained another 2.2% to $246.18, bringing its year-to-date gain to 31.0%. Live Nation shares improved 4.2% to $93.27 ahead of the company’s fourth-quarter earnings release on Feb. 22. Reservoir Media rose 8.6% to $6.96 a week after the company raised its guidance for full-year results and posted 19% revenue growth last quarter.
K-pop stocks have had a terrible start to 2024, though there was some improvement this week. SM Entertainment gained 9.7% to 80,100 won ($60.11), improving its year-to-date decline to 13%. HYBE, which is down 10.7% year-to-date, gained 4.3% to 208,500 won ($156.46). YG Entertainment rose 3.1% to 43,500 won ($32.64) but has fallen 14.5% in 2024. And JYP Entertainment managed a modest 0.7% gain, bringing its year-to-date deficit to 24.4%.
The Sphere venue in Las Vegas isn’t turning a profit, but it’s doing enough to encourage investors to buy into its owner, Sphere Entertainment Co.
Shares of Sphere Entertainment gained 13.8% to $40.29 this week after the company’s quarterly earnings report released Monday (Feb. 5) showed that the state-of-the-art venue — currently capturing eyeballs ahead of the Super Bowl in Las Vegas on Sunday — took in revenue of $167.8 million and had an adjusted gain of $14 million (adjusted to certain items including $117 million of non-cash impairment related to the company’s failed bid to open a Sphere in London).
Sphere Entertainment was the top-performing music stock in a week when music stocks soared to new heights, with the 20-company Billboard Global Music Index gaining 3% to land at a record 1,636.43. While the numbers of winners and losers were even at 10 stocks apiece, most of the index’s most valuable companies posted gains this week. Tencent Music Entertainment rose 6.7% to $9.67, Live Nation improved 1.5% to $89.53 and Universal Music Group gained 1.2% to 27.41 euros ($29.55).
Spotify, another of the index’s largest companies, gained 8.2% to $240.77 after its earnings results on Tuesday (Feb. 6) showed its subscriber number grew to 236 million, up 10 million in the quarter, and that revenue grew 16% to 3.67 billion euros ($4.05 billion). The share price reached its highest mark since December 2021 as investors discovered a renewed faith in Spotify following its decision to cut 17% of its workforce in December. Spotify has always had a good product. Now, there is a growing feeling it can be a good business, too.
“The market is now seeing the potential of this business,” Morgan Stanley analysts wrote in a Wednesday (Feb. 7) note to investors, “as record [monthly active user] net adds and subscribers come alongside price increases and an aggressive turn towards cost efficiency.” Stronger revenue growth and the potential for better margins led Morgan Stanley to raise its Spotify price target from $250 to $270.
Major indexes gained this week, too, and one reached a major threshold: The S&P 500 closed above 5,000 for the first time on Friday as it rose 1.4% to 5,026.61, while the Nasdaq composite improved 2.3% to 15,990.66, its highest level since 2021, thanks to big gains from chip maker Nvidia and e-commerce giant Amazon. In the United Kingdom, the FTSE 100 declined 0.6% to 7,572.58. South Korea’s KOSPI composite index rose 0.2% to 2,620.32. China’s Shangai Composite Index jumped 5% to 2,865.90.
It was a busy week for corporate earnings reports. CTS Eventim shares rose 5.5% to 66.90 euros ($72.12) following the company’s fourth-quarter results Wednesday. The German concert promoter’s 2023 revenue reached 2.4 billion euros, up 22.5%, and earnings before interest, taxes, depreciation and amortization improved 31.9% to 501.4 million euros.
Warner Music Group (WMG) shares briefly rallied following its earnings results on Thursday — with the stock up 5.1% to $38.05 — but it finished the day down 2.5% and the week down 2.6% to $35.71. Morgan Stanley analysts remained “overweight” on WMG and kept the price target at $42. Guggenheim analysts reiterated their “buy” rating and maintained their $46 price target.
MSG Entertainment shares rose 9% to $36.81 after the company’s fiscal second-quarter earnings results were released Wednesday. The New York-based live entertainment company raised revenue guidance for its full fiscal year by 10% to a range of $930 million to $950 million. Executive chairman/CEO James Dolan attributed the strong quarter to “record results” from the Christmas Spectacular production, the long-running show featuring the Radio City Rockettes.
LiveOne shares fell 2.1% after PodcastOne reported a 22% increase in revenue in the first nine months of its fiscal year on Thursday (Feb. 8). (LiveOne spun off PodcastOne in 2023 and retained a 73% stake.) PodcastOne ranked No. 10 in Podtrac’s top publisher’s rankings and achieved a U.S. audience of 5.3 million, but its net loss increased from $3 million to $13.7 million.
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).