Universal Music Group and its investors have good reason to feel conflicted about Spotify‘s hockey-stick value growth in 2024.
After all, UMG, the world’s largest music rightsholder, was worth three times as much as SPOT in market cap terms as recently as the end of 2022.
Yet as things stand today, in public valuation terms anyway, Spotify is king of the music business.
Having overtaken UMG’s public valuation this summer, Spotify – with a $92 billion market cap today – is currently worth approximately double Universal’s valuation on the Amsterdam Euronext.
(UMG’s market cap stands at EUR €41.73 billion today, or USD $44.1 billion at current exchange rates.)
Of course, company share price/market cap values can quickly fluctuate, especially in the unpredictable world of the music business.
(Spotify’s burst in value this year has partly been propelled by a slashing of headcount and a pull-back in marketing spend, both of which have sent the company’s profitability shooting upwards.)
Yet there’s a nuance to the ‘who’s worth more: UMG or Spotify?’ story that we must always remember: as things stand, Universal continues to own a minority stake in SPOT, acquired when Universal first licensed Spotify’s business for its launch 16 years ago.
According to Universal Music Group’s 2023 annual report, its ownership stake in Spotify at the close of last year amounted to 3.27%.
At various points over the past couple of years, the value of UMG’s ~3% stake in Spotify has fallen considerably below $1 billion.
At the close of 2022 (when UMG was worth 3X Spotify, remember), Spotify’s $15.25 billion market cap meant UMG’s stake was worth half a billion dollars.
Right now, though, with Spotify’s share price/market cap up 140.1% YTD on the New York Stock Exchange, this picture has changed dramatically.
According to MBW’s calculations, Universal’s 3.27% stake in Spotify was worth a whopping USD $3.01 billion as of Friday’s market close on the NYSE (November 15).
Universal isn’t the only music rights giant to hold a significant minority stake in Spotify: Sony Music Group is understood to own somewhere approaching 2.85% of Spotify today, a stake which is currently worth approximately…
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