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Spotify Shares Ride Netflix’s Gains, Leading Music Stocks to New Record

Mr. Nimbus | 01/26/2024

Spotify shares gained 4.7% to $214.13 this week, helping the Billboard Global Music Index improve 2.3% to a record 1,595.11. Spotify’s fourth consecutive weekly increase came two weeks ahead of its fourth-quarter earnings on Feb. 6, which will show the full impact of its recent price increases in the United States and other major markets. 

If a rising tide lifts all boats, Netflix’s superlative fourth-quarter earnings report explains why Spotify shares posted yet another positive week. Netflix shares rose 18.1% to $570.42 this week — including a 10.7% gain on Wednesday alone — after the company said it added 13.1 million subscribers in the fourth quarter, the most since 2020, with revenue up 12.5% to $8.8 billion. Not only was the quarter encouraging for streaming in general, the video streaming giant offered the music business some insights about finding growth in a maturing market: Netflix’s growth hasn’t been hurt by either the company’s constant price increases or its recent efforts to limit password sharing. In fact, pricing played an important part in that growth.

“As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service,” the company stated in a letter to shareholders. Cutting down on password sharing has made an impact, too. Netflix said “millions” of subscribers are using features such as Transfer Profile (a user transfers a profile from a shared account to a new account) and Extra Member (adding a user to an account for $7.99 per month in the United States), and that paid sharing “is now a normal course of business.” 

Because of its large market capitalization, Spotify’s gain was a major factor in the Billboard Global Music Index’s 2.3% gain this week. The top-performing music stock of the week was iHeartMedia, which gained 26.7% to $2.85, putting it 68% below its 52-week high of $9.01. Music streaming company LiveOne was another high performer, gaining 13.5% to $1.51. The company announced on Thursday that Podcast One — LiveOne spun off the podcast company and remains a majority owner — reached new agreements with two of its most popular podcasts, The Adam Carolla Podcast and The Adam and Dr. Drew Show. Elsewhere, Sphere Entertainment Co. shares rose 8.7% to $34.45 following the company’s recent hire of Jennifer Koester, a former Google executive, as president of Sphere Business Operations, effective Feb. 5. One of Koester’s duties will be to develop a corporate conference business for product launches and other events.  

Eight of the index’s 20 stocks fell this week — although none dropped more than 3%. SiriusXM shares fell 1.5% to $5.34; the company announced Wednesday that it would maintain its quarterly cash dividend at $0.02666 per share. Hipgnosis Songs Fund fell 2.1% to 0.7057 pounds per share amidst multiple regulatory filings that hinted at tension between the company’s new board and its investment advisor, Hipgnosis Song Management. Hipgnosis shareholders will vote on Feb. 7 on a proposal that would result in paying a fee to bidders on its catalog. 

Stocks were broadly up in the United States this week as positive economic news made an impact on markets. The tech-heavy Nasdaq climbed 0.9% to 15,455.36 and the S&P 500 rose 1.1% to 4,890.97. Microsoft, Alphabet and Meta reached new highs this week, though Tesla shares fell 13.6% after the company warned vehicle unit sales in 2024 “may be notably lower” than last year. On Friday, Intel shares fell 11.9% after the company offered investors a disappointing outlook for the current quarter during its Thursday earnings release.

On Thursday, the U.S. Department of Commerce’s Bureau of Economic Analysis released data that showed gross domestic product grew at a better-than-expected annualized rate of 3.3% in the fourth quarter of 2023. Then on Friday, the Department of Commerce released data that showed personal incomes ended the year on a high note by increasing 0.3% in December. What’s more, a measure of how much people are spending showed that price increases have slowed. Personal consumption expenditures in December were 2.6% higher year over year (and 2.9% higher excluding food and energy). Last week, new consumer sentiment data showed an improvement in Americans’ feelings about the economy and their expectations for future inflation. 

Stocks also improved outside of the United States. In the United Kingdom, the FTSE 100 rose 2.3% to 7,635.09. South Korea’s KOSPI composite index improved 0.2% to 2,478.56. And China’s SSE Composite Index jumped 2.8% to 2,910.22. 

This post was originally published on this site

Written by Mr. Nimbus

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