Spotify Stock Jumps 15%, Live Nation Shares Also Gain After Q3 Earnings

November 16, 2024 E Jazz Reporter

Music

The Billboard Global Music Index jumped 5.8% to a record 2,162.50, raising its year-to-date gain to 41.0%.

Spotify

Rafael Henrique/SOPA Images/LightRocket via Getty Images

Spotify is on such a hot streak that the streaming company nearly reached a $100 billion market capitalization this week. After the company’s third-quarter earnings showed cost-cutting has led to record profitability, shares peaked at a new all-time high of $489.69 on Thursday (Nov. 14), briefly putting its market capitalization above $98 billion. However, the stock fell on Friday (Nov. 15) to a final closing price of $458.32, valuing the company at $92.04 billion. While the stock was still up 14.5%, that marked a bit of a letdown from its previous high.

During the height of the pandemic, Spotify benefitted from a rush into streaming stocks as consumers spent more time with audio and visual media. Investors were also attracted to its push into podcasts, which provided an opportunity to improve upon the margins of its core music service. But investors eventually grew tired of Spotify’s growth-over-profitability mantra, sending the company’s share price from $387 in February 2021 to under $70 in November 2021. But a focus on cost-cutting and expansion into audiobooks helped bring investors back; Spotify shares gained 138% in 2023 and have already increased 144% in 2024.

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After delivering solid results and showing investors a pathway to greater profitability, Guggenheim increased its price target for Spotify to $500 from $420 and raised its estimate for 2025 operating profit to 2.5 billion euros ($2.63 billion) from 2.1 billion euros ($2.21 billion). Analysts cited management’s confidence in usage growth and ability to raise prices and further improve margins. Morgan Stanley raised Spotify to $460 from $430, also citing the company’s ability to further raise prices and management’s “commitment to financial discipline and driving profitability.” At JPMorgan, analysts upped Spotify to $530 from $425 for the aforementioned reasons, in addition to the stock’s coming inclusion in the MSCI World Index on Nov. 25.

A bevy of analysts also increased their price targets for Live Nation following the company’s earnings report on Monday (Nov. 11), which showed that the promoter achieved a record adjusted operating income in the third quarter. Among them: Rosenblatt Securities ($146 from $123), Goldman Sachs ($148 from $132), Benchmark ($145 from $108), Evercore ISI ($150 from $110), Oppenheimer ($155 from $120) and Wolfe Research ($152 from $125). Live Nation shares finished the week at $129.00, up 4.9%, and reached a new intraday high of $130.83 on Friday.

Spotify’s big gain was the primary reason the Billboard Global Music Index grew 5.8% to 2,162.50 despite just six of its 20 stocks finishing the week in positive territory. The float-adjusted, unweighted index measures the aggregate market values of the 20 member companies; Spotify is the most valuable company on the index and is more than twice as valuable as the next company, Universal Music Group (UMG). The week’s other five gainers are among the index’s largest companies: Live Nation, CTS Eventim, JYP Entertainment, HYBE and SM Entertainment all have market capitalizations exceeding $1 billion.

Stock markets hit a post-election hangover this week that stalled the gains seen after Donald Trump won the presidential election on Nov. 5. In the United States, the Nasdaq fell 3.1% and the S&P 500 dropped 2.1%. The United Kingdom’s FTSE 100 lost just 0.1%. South Korea’s KOSPI composite index fell 5.6%. China’s Shanghai Composite Index lost 3.5%.

Despite the KOSPI’s decline, K-pop stocks — which have recovered ground in the second half of the year and now have a collective year-to-date deficit of 20.2% — were up across the board. JYP Entertainment gained 8.2%, HYBE improved 3.2%, SM Entertainment added 2.8% and YG Entertainment rose 2.7%.

On the live front, Sphere Entertainment Co. fell 8.6% after its latest earnings showed a slowdown in revenue at its Sphere division, with Macquarie lowering the company’s price target to $45 from $47. And at MSG Entertainment (MSGE), shares dropped 6.8% to $40.00 after Bernstein reduced its MSGE price target to $44 from $45 earlier in the week.

Over at radio, Cumulus Media fell 19.3% to $0.71 after it reportedly conducted layoffs at stations in Central Pennsylvania, Indianapolis, Detroit and San Francisco as part of broader job cuts ahead of the holiday season — all on the heels of recent layoffs at competitor iHeartRadio. Elsewhere music streamer LiveOne dropped 12.4% to $0.78 this week.

Billboard

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