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Concert Business Leads Music Stocks This Week Amid Strong Jobs, Consumer Spending Reports

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Live Nation, Sphere Entertainment Co. and CTS Eventim were the top three music stocks this week amidst news that consumers continue to spend despite nagging inflation and a resumption of U.S. student loan payments for millions of borrowers. Live Nation shares rose 6% to $88.00, narrowly beating Sphere Entertainment’s 5.9% gain to $39.35. German promoter and ticketing company CTS Eventim jumped 4.7% to 56.40 euros ($59.79).

Despite some economic warning signs, consumers continue to spend on experiences such as concerts, travel and luxury goods. Americans spent 5.8% more in August than in the prior-year period, according to the National Retail Federation. Many consumers are now facing the resumption of monthly student loan payments after a long grace period caused by the COVID-19 pandemic — it was one factor in retail giant Target cutting its profit forecasts in August. Gas prices are on the rise in much of the United States. Still, concert ticket sales are booming and airlines reported strong revenue this summer. More encouraging news came from Friday’s U.S. jobs report from the Bureau of Labor Statistics: Non-farm employment rose by 336,000 and the unemployment rate was unchanged at 3.8%.

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It was a big week for Sphere Entertainment as its shares climbed 11.1% on Monday following U2’s opening weekend at Sphere in Las Vegas. The rave reviews and mind-blowing videos pushed Sphere Entertainment’s stock price as high as $43.59, up 17.3%, before falling 5% to $39.23 at the end of the trading day. Sphere Entertainment didn’t maintain the momentum, however, and dropped 5% from Tuesday to Friday. Still, Sphere’s opening provided a boost to the company and validated Sphere Entertainment CEO James Dolan’s vision to create a new category of venue built specifically for music. Now, investors will likely consider how many other artists have the necessarily large and fervent fan bases to book Sphere residencies and build productions worthy of Dolan’s $2.3 billion gamble. 

The 21-stock Billboard Global Music Index improved 2.1% to 1,373.62 as 12 stocks finished the week in positive territory. The index’s four live music companies had an average gain of 4.3%. Six streaming companies had an average gain of 1.6% while eight companies in recorded music and publishing dropped an average of 0.9% and three radio companies fell an average of 7.6%. 

Music outperformed many indexes as stocks had a mixed week. In the United States, the S&P 500 improved 0.8% and the tech-heavy Nasdaq composite improved 1.8%. In the United Kingdom, the FTSE 100 fell 1.5%. South Korea’s KOSPI composite index fell 2.3%.

Another of the index’s more prominent components, Warner Music Group (WMG), rose 4.5% to $32.80, the fourth-largest gain of the week. WMG closed its year-to-date deficit to 6.3% after gaining 2.8% on Friday and pushing its market capitalization to nearly $17 billion. Universal Music Group improved less than 0.1%. Two K-pop companies, HYBE and SM Entertainment, fell 3.8% and 1.9%, respectively. 

Spotify, a major player on the index with a $31.3 billion market capitalization, improved 3.5% to $160.07 and took its year-to-date gain to 102.7%. Spotify announced on Wednesday that it’s giving subscribers in the United Kingdom and Australia up to 15 hours of audiobook streaming time per month; the allotment will roll out to U.S. subscribers later this year. Audiobooks are an integral part of Spotify’s plans to become a one-stop audio destination. The news wasn’t cause for concern that Spotify will incur a previously undisclosed expense from this streaming allotment. Guggenheim analysts wrote in a report on Tuesday that they don’t expect audiobook streaming to add to expenses and that Spotify likely built those costs into its latest guidance (which is 26% gross margin and a $45 million operating loss in the third quarter).

Three radio companies were among the four worst-performing music stocks of the week. iHeartMedia shares fell 14.2% to $2.71, bringing the year-to-date loss to 55.8%. Cumulus Media shares dropped 4.5% and SiriusXM shares fell 4.0%. The other notable decline of the week came from Hipgnosis Songs Fund, which fell a further 7.1% to 0.745 GBP ($0.91) in the wake of its Sept. 14 announcement that it will sell $465 million in catalog assets to help lift its struggling share price.

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