Universal Music Group’s stock plunged 24% on Thursday, erasing more than $16 billion in market value after it revealed its revenue growth from subscription and streaming services fell below expectations.
The Netherlands-based music industry giant – behind big names including Taylor Swift and Billie Eilish – saw its market capitalization tumble to $39.9 billion, down from $56.5 billion a day earlier, according to FactSet.
The music group’s revenue rose 9.6% year-over-year in constant currency, bringing in 2.93 billion euros. This came in above analysts’ estimates of 2.89 billion euros, according to Visible Alpha.
Music subscription revenue grew 6.9%, as major players like Spotify and Apple Music have raised subscription prices.
Meanwhile, streaming revenue dropped 3.9%, which Universal attributed to its other streaming partners’ new subscription numbers falling. This decline is likely due to streaming platforms coming down from a pandemic boom.
While studies show people were actually streaming and consuming less audio during the pandemic, streaming platforms still saw a spike in new subscribers.
Spotify, for example, welcomed 6 million new Premium subscribers and beat expectations during pandemic lockdown in the first quarter of 2020.
In addition to the post-pandemic normalization, Universal has faced licensing issues with a few major platforms.
Mark Zuckerberg’s Meta stopped licensing premium music videos from the group in May.
And Universal lost revenue during a months-long TikTok debacle over royalty payments and AI policies, during which the Chinese-owned app blocked the label’s music.
Universal physical revenue jumped 14.4%, likely due to the resurgence of vinyl and CD popularity and big releases from its top selling artists this year.
Adjusted earnings before interest, taxes, depreciation and amortization grew 11.3%, above analyst expectations, according to Visible Alpha.
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