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Wall Street’s post-earnings enthusiasm for Warner Music Group stock (NASDAQ: WMG) was short lived, as shares have fallen back to their starting point. Meanwhile, Universal Music Group stock (Euronext: UMG) has regained a bit of ground but remains well beneath its 2024 high.
At the time of writing, Warner Music stock was trading for $28.73 per share, up slightly across the past five days but beneath the approximately $30 per share it cracked yesterday. The latter bump followed the release of the major label’s financials for April, May, and June.
Said financials shed light on relatively strong streaming revenue growth and optimistic comments about the future from CEO Robert Kyncl. We covered that streaming improvement and broke down how it compares to the streaming showings of Universal Music and Sony Music for Q2.
As many know, Universal Music in its own second-quarter earnings report acknowledged a slowdown in streaming growth, and the confirmation, notwithstanding other seemingly positive components of the same report, set the stage for a more than 20 percent stock price decline.
Now, UMG has rebounded to some extent, referring to a per-share price of $24.37 (€22.33) when the Euronext Amsterdam closed today. That’s up from a 52-week low of just beneath $21.82 (€20) per share, but materially less than the $30.55 (€28) or so value UMG boasted before its Q2 earnings release.
Among other things, the points underscore the market’s clear-cut focus on continued streaming growth and, in the bigger picture, consistent profitability.
As we noted yesterday, it’s not as if streaming revenue is stalling across the board, with an upside presumably forthcoming from Spotify’s deluxe plan (and different offerings) as well. But outside of industry circles, even a modest growth-rate decline is evidently news to investors.
Expanding on the idea, it’s worth reiterating, at the top level, the trends at play across the broader market. In keeping with these inherently difficult-to-predict trends, Warner Music stock is still down about 20 percent from 2024’s beginning.
And for Universal Music stock, the dip from the top of the year until now is comparatively small despite the aforementioned €28 or so high it touched in the interim. All told, UMG has parted with roughly 11 percent of its value during 2024.
Given investors’ emphasis on near-term results, it will, of course, be particularly interesting to see how the majors perform throughout the remainder of 2024. Especially in today’s market, valuations are hardly set in stone or based solely on logic; Spotify, having only recently dedicated itself to achieving consistent profitability, has seen its shares spike by an astonishing 142 percent during the past year.
