SPOT - Warner Music Group Poised To Shed Its Laggard Status

2024-07-10 08:51:53 ET

Summary

• WMG stock underperformed, down 7% since last post, while SPOT surged 306%.
• WMG's relative valuation remains low, potential for higher valuation on strong revenue and earnings growth.
• WMG's 2023 financial performance was tepid, 2024 results not promising, but recent trends show improvement.

When I wrote about Warner Music Group ( WMG ) in late November 2022, I made the case for a sustained breakout for the stock. Trading was very volatile from there, and the breakout lasted less than two months. Since that time, WMG is down 7.0%, a significant underperformance to the S&P 500 ( SPY ). To add insult to injury, Spotify ( SPOT ) turned into the best play on industry trends, riding improved monetization of music through streaming. In fact, streaming is WMG’s fastest revenue growing segment, particularly subscription streaming and the streaming component of music publishing). SPOT is up an enviable 306% since my post on WMG....

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