Universal Music Group, stock market thud after half-year accounts

Never since its IPO in 2021. What went up in smoke for Universal Music Group was more than €10 billion in capitalisation, which fell to around €39.7 billion after shares in the global music industry giant, which represents artists ranging from Taylor Swift to Drake, plummeted 23.54 per cent.

It was a slump, but it could have been even worse considering that the stock lost 30% in the morning on the Amsterdam Stock Exchange, dragging the shares of Vivendi (the former parent company that retained 10% of the music major lost 6%) and the Bolloré group (which owns 18% of Umg and 29.9% of Vivendi and lost 5.5%) into the red.

Yet the world's leading entertainment label posted higher-than-estimated revenues and still exceeded expectations in terms of profitability, generating a net profit of EUR 914 million (compared to EUR 625 million a year earlier) between January and the end of June.

But the slowdown in the subscription and streaming segments, as well as the end of the agreement with Meta, had a strong impact. 'On the platform side, we have changed our licensing agreement with Meta. It previously offered premium music videos on Facebook. This offering has been less popular with Facebook users than other music products and, as a result, Meta will no longer be licensing premium music videos to us as of May of this year,' said the group's chief financial officer, Boyd Muir, during a conference with analysts.

In detail, Umg, owner of the famous Abbey Road studios - where the Beatles, Lady Gaga, Kanye West and Amy Winehouse have worked - posted second-quarter turnover of EUR 2.93 billion (+9.6% in constant currency), surpassing the EUR 2.89 billion expected by analysts according to the Visible Alpha consensus. On the other hand, however, revenues from subscriptions and streaming (worth half of the turnover) grew by +4.1%, which, although an improvement, still represents a slowdown compared to the +7% in 2023 and +19% in 2022.