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The Ledger: Music Stocks Lost Over $75B in the First Half of 2022

Among the 22 public music companies Billboard tracks, Spotify and Universal Music Group lost the most in terms of market capitalization.

The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.

Music might be a recession-proof asset, as the saying goes, but music stocks aren’t immune to the forces that have degraded stock markets in 2022. In fact, according to Billboard‘s analysis, 22 music-related stocks had an average share price decline of 35.6% in the first half of the year, equaling a $75.3 billion total loss of market capitalization. Of that, almost two-thirds came from the three largest companies: Spotify, Universal Music Group and Warner Music Group.

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Music’s poor performance was merely par for a challenging course in 2022. The stock market had its worst first half in 50 years. The tech-heavy Nasdaq composite fell 41.9%, while the New York Stock Exchange composite lost 18.5%. Two major indices lost big, too: the S&P 500 dropped 25.9%, while the 30 companies in the Dow Jones Industrial Average fell 18.1%.

In music, performances varied widely by sector. Concert promotion and ticketing companies fared the best with an average share price fall of 30.3%. Among these, German promoter CTS Eventim dropped 22.3%, while ticketing company Eventbrite was the worst of the group with a 41.1% decline.

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Record labels and music publishers had an average decline of 30.5%. South Korean company HYBE suffered a 58.3% decline due largely to news that its top act, K-pop group BTS, is taking a break while its members pursue solo projects. Universal Music Group dropped 22.8% and shed $10.4 billion of market capitalization — the second-largest loss among the total group of 22 music companies.

The best-performing companies among music rights holders, meanwhile, were the two music royalty funds traded on the London Stock Exchange: Round Hill Music Royalty Fund (down 5.4%) and Hipgnosis Songs Fund (down 12.2%). Traditional labels and publishers suffered deeper losses of varying degrees. Elsewhere, French company Believe sank 53.3% while Warner Music Group lost 43.6% and nearly $9.8 billion of market capitalization.

Once high-flying music streaming companies have also since fallen to earth as investors prioritized value over growth. Spotify, the industry leader, shed $27.4 billion in market capitalization after its stock fell 59.9%; overall, the five publicly traded, stand-alone music streaming companies declined an average of 44.0%. Arab music streamer Anghami declined 54.5%, followed by Chinese companies Cloud Village and Tencent Music Entertainment, which fell 45.7% and 26.7%, respectively. (TME fared relatively well in the first half of 2022 because it had already dropped dramatically from 2021. At Friday’s closing price, TME is 84.4% below its all-time high of $32.25 set on March 23, 2021, before incursions by Chinese regulators caused deep losses for Chinese companies traded on foreign markets.) And LiveOne — formerly LiveXLive — dropped 33.1%.

SiriusXM, the financially steady satellite radio operator which owns the music streaming platform Pandora, had the best performance of all 22 public music companies with just a 3.5% decline. The company held up well during the pandemic and the subsequent slowdown in auto sales which provide the company with a lucrative customer acquisition channel.

Four radio companies collectively had the worst six months among all 22 companies, losing an average of 48.9%. IHeartMedia and Audacy dropped 62.5% and 63.4%, respectively. Cumulus Media, which rejected a takeover bid in May, and Townsquare Media fared better with declines of 31.3% and 38.6%, respectively.

Among all public music companies, UMG is currently the largest in terms of market capitalization ($38.6 billion). SiriusXM is a distant second at $24.9 billion – although its enterprise value is about $35 billion after adding the value of its debt.

It’s worth noting, however, that just one week into July these first-half numbers are already outdated. Four straight days of gains marked the longest winning streak since March and put many music stocks well above their mid-year marks. Since June 30, Spotify is up 11.1% and has added $2 billion in market value. HYBE has risen 13.1% this month to help recapture much of its BTS-related losses. Although some other companies — like Anghami (down 12.9%) and iHeartMedia (down 8.7%) — have continued to struggle, 15 of the 22 stocks are in positive territory in July.

 

STOCKS

Through July 8, the % change over the last week, and the year-to-date change.

Universal Music Group (AS: UMG): 20.95 euros, +9.6%, -15.5% YTD
Spotify (NYSE: SPOT): $104.24, +6.9%, -55.5% YTD
Warner Music Group (Nasdaq: WMG): $25.28, +2.9%, -41.5% YTD
HYBE (KS 352820): KRW 164,500, +17.5%, -52.9% YTD
Live Nation (NYSE: LYV): $84.36, +1.6%, -29.5% YTD
iHeartMedia (Nasdaq: IHRT): $7.20, -10.8%, -65.8% YTD
Cumulus Media (Nasdaq: CMLS): $7.73, -2.3%, -31.3% YTD
Tencent Music Entertainment (NYSE: TME): $4.81, -8.2%, -29.8% YTD
Cloud Village (HKE: 9899): HKD 80.65, -5.6%, -48.7% YTD
Reservoir Media (Nasdaq: RSVR): $6.89, +9.7%, -12.9% YTD

NYSE Composite: 14,642.33, +1.0%, -14.7% YTD
Nasdaq: 11,635.31, +2.8%, -25.6% YTD
S&P 500: 3,899.38, +1.8%, -18.2% YTD