Radio stocks fared the worst as a group amid worrisome market declines and the anticipation of a substantial rate hike.
Radio stocks had the worst day among music-related companies on Monday as four leading companies’ stocks dropped an average of 13.2%. iHeartMedia dropped 13.2% while Audacy and Townsquare Media fell 10.4% and 8.5%, respectively.
On Friday, the U.S. Bureau of Labor Statistics reported its consumer price index had risen 8.6% in May from the prior-year period — the highest mark in 40 years. That led to some expectations the Fed would opt for a larger rate increase than was expected last week. A cryptocurrency rout helped set the stage for a gloomy Monday as Bitcoin fell below $23,000 — its lowest level since December 2020 and nearly 67% below its all-time high of $68,906.48 set in November. Ethereum, the blockchain many NFTs are created on, dropped 75.6% below its all-time high — also set in November. As a result, shares of Coinbase, a cryptocurrency exchange, fell 11.4% to an all-time low on Monday.
Music assets are generally believed to be relatively safe investments because they are counter-cyclical to the prevailing market. In other words, recording and publishing catalogs aren’t affected by macroeconomic forces in the same way other assets will be. People will likely keep their music subscriptions even as they pare back other spending. That could explain why major record labels and music publishers fared relatively well. Shares of Universal Music Group and Warner Music Group fell 4.
Even during a recession, consumers are likely to keep their music subscription services. As a result, streaming companies that generate most of their revenue from recurring monthly subscription fees could be less exposed to a downturn. Four on-demand music streaming stocks posted an average decline of just 1.8%. Spotify dropped 3.5% and Tencent Media Entertainment fell 2.5%. Anghami’s declined by 6.2%, but a 4.9% increase by Chinese company Cloud Village helped balance out the average.
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