Sat. Apr 13th, 2024

HYBE Shares Gain 18% Following UMG Partnership Announcement as Music Stocks Rise Overall

By Michael Mar 30, 2024

HYBE shares jumped 17.5% to 230,000 won ($170.84) this week following news that the company struck a 10-year partnership with Universal Music Group (UMG) that calls for the label to distribute HYBE’s physical and digital music and put its artists on HYBE’s Weverse social media platform. HYBE America CEO Scooter Braun will oversee all promotional and marketing collaborations between the two companies. After dropping 9.1% over the previous four weeks, the announcement brought the South Korean company’s year-to-date deficit to just 1.5%. 

Another K-pop company, SM Entertainment, was one of five music companies to post double-digit stock gains this week, with its shares rising 14% to 87,800 won ($65.22). On Wednesday (March 27), the company announced the appointment of Tak Young-jun to co-CEO alongside existing CEO Jang Cheol-hyuk. SM Entertainment also announced a 1,200-won ($0.89) per-share dividend totaling 28.1 billion won ($20.8 million), an amount equal to the prior year’s dividend.

The 20-company Billboard Global Music Index rose 1.9% to a record 1,752.24 as 16 stocks posted gains, only three lost ground and one was unchanged. Even with an unusually high number of winners, the float-adjusted index, which gives greater weight to more valuable companies, fell this week because two of the three losers are among the most valuable music companies. Spotify, which has a market capitalization of roughly $50 billion, fell 0.4% to $263.90. Live Nation fell 0.2% to $105.77; its market capitalization is about $24 billion. Two more of the index’s largest companies had gains under 2%: UMG rose 1.6% to 27.88 euros ($30.11) and Warner Music Group (WMG) improved 1.4% to $33.02. Another valuable member of the index, Chinese music streamer Tencent Music Entertainment, rose 2.2% to $11.19. 

Hipgnosis Songs Fund shares climbed 13.5% to 69 pence ($0.87) after the company’s board of directors released an internal report on Thursday (March 28) that showed the fund’s investment advisor, Hipgnosis Song Management, “materially” overstated annual revenue and misled investors about the amount of control exercised over the rights in its portfolio. The negative news was welcomed by investors who have taken issue with the company’s accounting practices and portfolio valuation. Hipgnosis shares traded as low as 52.9 pence ($0.67) on March 4 but have rebounded since the company overhauled its board and hired Shot Tower Capital to put together the due diligence report. 

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CTS Eventim, the German live events promoter and ticketing company, rose 11.1% to 82.45 euros ($89.05) after releasing earnings for the fourth quarter and full-year 2023 on Tuesday (March 26). The company expects “a moderate rise” in total revenue in 2024. Demand is “rising continuously,” CEO Klaus-Peter Schulenberg wrote in the annual report, and the company expects the recent decline in inflation to provide “new, consumption-driven impetus for growth in the future.”

Believe shares rose 7.2% this week to 16.92 euros ($18.27) following the company’s announcement that it will accept a formal offer from WMG by April 7. WMG revealed its interest in Belief on March 7 and said it would be willing to pay at least 17 euros ($18.36) per share. A consortium that includes Believe CEO Denis Ladegaillerie has lined up a large block of shares and is willing to offer 15 euros ($16.20) per share for the remainder. With Believe shares currently trading so close to WMG’s soft bid, investors apparently don’t think the consortium’s original offer is going to suffice. 

Stocks were mixed as the trading week was shortened by some exchanges’ closure for Good Friday. In the United States, the Nasdaq composite fell 0.3% to 16,379.46 and the S&P 500 rose 0.4% to 5,254.35. In the United Kingdom, the FTSE 100 rose 0.3% to 7,952.62. South Korea’s KOSPI composite index fell 0.1% to 2,746.63. China’s Shanghai Composite Index dropped 0.2% to 3,041.17. 

By Michael

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