Excellent Buy Opportunities: Warner Music Group
Warner Music Group stocks are trading 40% off their peaks in 2021. The Group host many prominent artists like Madonna, Ed Sheeran and David Guetta. The demand for music content is rising, while monetisation opportunities are expanding. The number of streaming services subscriptions is rising; licensed music is extending the audience to Youtube, TikTok and others.
Bullish drivers for WMG could be distinguished in producer abilities of the label. The Silk Sonic duet (Bruno Mars and Anderson Paak) won four GRAMMY’s awards. The major growth driver is cooperation with digital platforms. WMG inked a deal with TikTok last December to license songs and music from Sony Music Entertainment available across the TikTok App. WMG expects the deal to bring “hundreds of million dollars a year”. The reviving concert tours after COVID-19 restrictions would also be a great contribution to the company’s revenues.
The financial Q2 that ended March 31 2022 revenues were up by 10% year-on-year to $1.38 billion. Streaming services revenues surfed 9% year-on-year to $898 million, bringing the share up to 65% of total revenues. Adjusted EBITDA rose by 5% year-on-year to $282 million, while EBITDA margin topped 20.5%. Dividend yield of WMG is at 2%.
Mid-term target price for WMG is at $38.