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.
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.
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
