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New York Interest > Blog > Business > Universal Music Group loses $16B after weak streaming reveal
Business

Universal Music Group loses $16B after weak streaming reveal

NewYork Interest Team
Last updated: July 25, 2024 8:11 pm
NewYork Interest Team
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Universal Music Group loses B after weak streaming reveal
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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.

Universal Music Group shares plummeted on Thursday after disappointing subscription revenue growth. REUTERS
The Netherlands-based music group is home to big name artists like Taylor Swift and Billie Eilish. Getty Images for TAS Rights Management

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.

Universal has seen a boom in physical vinyl and CD sales. Variety via Getty Images
Music streaming apps like Spotify saw huge subscriber booms during the pandemic. REUTERS

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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