Universal Music Group shares jumped nearly 15% at their peak after stronger earnings gave investors fresh reasons to buy. The Amsterdam-listed stock had lost around 30% of its value before the rally, making the sharp rise a big change from its poor run.
Euronext data showed UMG opening at €17.06, then hitting €18.20 before closing at €17.09. That final price marked a 7.9% gain from €15.84. At its peak, the surge added about $4.8 billion to its market value, though that fell to roughly $2.5 billion by closing.
Trading activity also shot up. Some 6.04 million shares changed hands, compared with just 1.93 million in the prior session. UMG led all gainers on Amsterdam's AEX index.
The main reason for the excitement was subscription income. Without Downtown Music Holdings, UMG's recorded music streaming revenue rose 9.5% at fixed exchange rates, beating the 8.2% rise that analysts had expected.
And that was a change from earlier results. Growth had slipped from 7.9% to 6.7%, with the weaker figure helping spark a steep sell-off. At one stage, UMG stock had dropped roughly 25% after those figures came out.
Factor in Downtown, which Virgin Music Group bought, and the streaming numbers get even larger. Subscription sales reached €1.422 billion, or about $1.64 billion, up 19.2% after adjusting for currency moves.
UMG credited higher wholesale rates and more paying listeners for the gains. It also said the loss of market share had eased compared with the earlier part of the year.
Profit margins improved as well. The group's adjusted EBITDA margin reached 21.5%, up from 20.5%. Its core recorded music business, without Downtown, reached 26.2% after a rise of 1.2 percentage points.
Lower relative spending on finding and developing talent helped those margins. Tighter controls on ads and general costs played a part, although changes in the mix of songs and sales held back some of the gains.
Across the whole company, revenue hit €3.394 billion, or $3.90 billion, with constant-currency growth of 11.7%. Without Downtown, the rise was 5.3%. Adjusted EBITDA came in at €729 million, around $838.7 million, up 9%.
But the music publishing business had a quieter run. Sales there rose just 1.5% without Downtown, while its adjusted profit margin fell 1.5 percentage points to 24.2%.
Finance chief Matt Ellis said UMG plans to keep improving its costs and get more value from Downtown. CEO Lucian Grainge also backed more investment in artists, streaming revenue, and technology while making the company leaner.
There's another bit of context here. Bill Ackman's Pershing Square had offered to buy UMG at a value of roughly €55.8 billion, or $64.4 billion. That worked out to €30.40 per share.
UMG's board rejected that approach, arguing the price did not reflect the company's value or offer shareholders a better deal.
Euronext data showed UMG opening at €17.06, then hitting €18.20 before closing at €17.09. That final price marked a 7.9% gain from €15.84. At its peak, the surge added about $4.8 billion to its market value, though that fell to roughly $2.5 billion by closing.
Trading activity also shot up. Some 6.04 million shares changed hands, compared with just 1.93 million in the prior session. UMG led all gainers on Amsterdam's AEX index.
The main reason for the excitement was subscription income. Without Downtown Music Holdings, UMG's recorded music streaming revenue rose 9.5% at fixed exchange rates, beating the 8.2% rise that analysts had expected.
And that was a change from earlier results. Growth had slipped from 7.9% to 6.7%, with the weaker figure helping spark a steep sell-off. At one stage, UMG stock had dropped roughly 25% after those figures came out.
Factor in Downtown, which Virgin Music Group bought, and the streaming numbers get even larger. Subscription sales reached €1.422 billion, or about $1.64 billion, up 19.2% after adjusting for currency moves.
UMG credited higher wholesale rates and more paying listeners for the gains. It also said the loss of market share had eased compared with the earlier part of the year.
Profit margins improved as well. The group's adjusted EBITDA margin reached 21.5%, up from 20.5%. Its core recorded music business, without Downtown, reached 26.2% after a rise of 1.2 percentage points.
Lower relative spending on finding and developing talent helped those margins. Tighter controls on ads and general costs played a part, although changes in the mix of songs and sales held back some of the gains.
Across the whole company, revenue hit €3.394 billion, or $3.90 billion, with constant-currency growth of 11.7%. Without Downtown, the rise was 5.3%. Adjusted EBITDA came in at €729 million, around $838.7 million, up 9%.
But the music publishing business had a quieter run. Sales there rose just 1.5% without Downtown, while its adjusted profit margin fell 1.5 percentage points to 24.2%.
Finance chief Matt Ellis said UMG plans to keep improving its costs and get more value from Downtown. CEO Lucian Grainge also backed more investment in artists, streaming revenue, and technology while making the company leaner.
There's another bit of context here. Bill Ackman's Pershing Square had offered to buy UMG at a value of roughly €55.8 billion, or $64.4 billion. That worked out to €30.40 per share.
UMG's board rejected that approach, arguing the price did not reflect the company's value or offer shareholders a better deal.
