Universal Music Stock Takes Big Hit, As Streaming And Subscription Revenue Shrinks

Universal Music Group’s stock dived 24% today, after it revealed its revenue growth from subscription and streaming services fell below expectations.

The plunge represents $16 billion in market value for the group, which is home to such big names as Taylor Swift, Drake, Adele, and Billie Eilish.

The decline is attributed to so-so results for its streaming and subscription businesses.

The company’s second quarter subscription revenue slowed to 6.9% growth year-over- year, excluding foreign exchange (FX). That’s down from 12.5% in the first quarter.

Streaming revenue decreased 3.9% ex-FX in the second quarter, a significant reversal from the 10.3% growth it recorded in Q1. The decrease was blamed on “a deceleration in growth at key advertising-based platform partners, as well as shortfalls on certain platforms related to the timing of deal renewals.”

In May, UMG ended its partnership with Meta Platforms (META), which was licensing premium music videos for Facebook.

UMG also lost a month’s worth of revenue during its high-profile battle with TikTok over a new licensing agreement.

UMG VP and CFO Boyd Muir said the year-over-year deceleration in subscription growth was “partially due to the timing of price increases” from its partners.

UMG’s partners include audio streaming giants like Spotify (SPOT), Amazon Music (AMZN), and Apple Music (AAPL).

“The other factor impacting our subscription revenue growth this quarter is the slowdown in subscriber growth at certain platforms, which is occurring while the overall subscription marketplace continues to experience significant growth in subscribers globally,” Muir added. “While Spotify, YouTube, and many regional and local platforms have continued to exhibit healthy growth in subscribers, other large partners who have been less successful in driving global adoption have seen a slowdown in new subscriber additions.”

Total revenue rose for the 12th consecutive quarter to 2.93 billion euros ($3.18 billion), representing roughly 9% year-over-year growth — and ahead of consensus estimates.

Earlier this year, UMG initiated a restructuring plan to generate 250 million euros in annual savings by 2026. That included job cuts.

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