Universal Music Shares Plunge After Streaming Growth Disappoints

   By Mauro Orru 
 

Shares of Universal Music Group slumped in Friday morning trading after revenue growth from streaming came below analysts' expectations for the third quarter.

At 0800 GMT, Universal Music shares traded 7.3% lower at EUR23.29.

The record label behind the Weeknd, Billie Eilish and Taylor Swift on Thursday reported overall revenue of 2.75 billion euros ($2.90 billion) in the three months to the end of September, up 9.9% on year at constant currency. Revenue from subscriptions grew 13% to EUR1.06 billion, while streaming revenue rose 5% to EUR357 million. Citi analysts had forecast streaming revenue growth of 8% at constant currency.

The rise in streaming revenue marks a turnaround from the 2.2% contraction in the first quarter of the year, but suggests that the exceptional levels of growth the company enjoyed during the height of the pandemic are confined to the past. Streaming services boomed during the pandemic as listeners turned to digital when coronavirus restrictions brought live concerts to a standstill.

Earlier this week, Spotify Technology said it added six million new paying subscribers during the third quarter after the streaming giant raised subscription prices, following similar moves by Apple and Amazon.com on their own music-streaming offerings. Analysts say price hikes at major streaming platforms will bring in additional revenue for record labels like Universal.

Physical revenue, which includes CD and vinyl sales, jumped 20% to EUR294 million. Taylor Swift, Seventeen, Morgan Wallen, Olivia Rodrigo and King & Prince were among the top sellers for the quarter.

Adjusted earnings before interest, taxes, depreciation, and amortization--a key profitability metric for Universal--climbed to EUR581 million from EUR553 million, generating a 21.1% adjusted margin.

Write to Mauro Orru at [e-mail]

(END) Dow Jones Newswires

October 27, 2023 04:33 ET (08:33 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.