Universal Music Group shares plunged 24% on Thursday, wiping more than $16 billion in market value after the company revealed weaker-than-expected revenue growth from its subscription and streaming services.
The Netherlands-based music giant, whose roster includes big-name artists such as Taylor Swift and Billie Eilish, Market capitalization plummets That was down to $39.9 billion from $56.5 billion the previous day, according to FactSet.
The music group’s revenue grew 9.6% year-on-year to €2.93 billion at constant currency, beating analyst expectations of €2.89 billion, according to Visible Alpha.
Music subscription revenue increased 6.9% as major companies like Spotify and Apple Music increased their subscription fees.
Meanwhile, streaming revenue fell 3.9%, but Universal attributed that to a decline in new subscriber numbers at its other streaming partners, likely as the pandemic-induced boom for streaming platforms fades.
Research shows that people actually Streaming and audio consumption reduction Even during the pandemic, streaming platforms have seen a surge in new subscriber numbers.
For example, Spotify We welcomed 6 million new premium subscribers This was above expectations during the pandemic lockdown period in the first quarter of 2020.
In addition to a return to post-pandemic normalcy, Universal is facing licensing issues with some major platforms.
Mark Zuckerberg’s Meta stopped licensing premium music videos from the group in May.
Universal also lost revenue during the months-long TikTok turmoil over royalty payments and AI policies, during which the Chinese-owned app blocked the company’s music.
Universal’s physical revenue rose 14.4%, likely due to a resurgence in popularity for vinyl and CDs and some big releases from this year’s top-selling artists.
Adjusted earnings before interest, taxes, depreciation and amortization rose 11.3%, beating analyst expectations, according to Visible Alpha.
