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Warner Music Group (WMG)
NASDAQ:WMG
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Warner Music Group (WMG) AI Stock Analysis

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WMG

Warner Music Group

(NASDAQ:WMG)

Rating:68Neutral
Price Target:
$32.00
▲(2.73%Upside)
Warner Music Group's strong financial performance and strategic initiatives are offset by high leverage and valuation concerns. Technical indicators suggest caution due to potential overbought conditions. The earnings call reflects both opportunities and challenges, impacting short-term outlook.
Positive Factors
Commercial Agreements
Recent commercial agreements with DSPs will provide greater visibility and predictability in the subscription streaming business.
Global Streaming Growth
WMG is well-positioned to benefit from the ongoing growth in paid music streaming globally, with potential upside from subscription price increases and emerging platforms.
Joint Venture
A joint venture with Bain allows for the purchase of up to $1.2 billion of music catalogs, providing additional firepower for investments into A&R.
Negative Factors
Recorded Music Performance
Warner Music Group reported disappointing F2Q25 results which were below revenue and adj. OIBDA expectations.
Streaming Growth Outlook
Downgrade to Neutral on weaker outlook for subscription streaming.
Subscription Streaming
Weaker Subscription and Ad-supported Streaming growth.

Warner Music Group (WMG) vs. SPDR S&P 500 ETF (SPY)

Warner Music Group Business Overview & Revenue Model

Company DescriptionWarner Music Group Corp. operates as a music entertainment company in the United States, the United Kingdom, Germany, and internationally. The company operates through Recorded Music and Music Publishing segments. The Recorded Music segment is involved in the discovery and development of recording artists, as well as related marketing, promotion, distribution, sale, and licensing of music created by such recording artists; markets its music catalog through compilations and reissuances of previously released music and video titles, as well as previously unreleased materials; and conducts its operation primarily through a collection of record labels, such as Warner Records and Atlantic Records, as well as Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Roadrunner, Sire, Spinnin' Records, Warner Classics, and Warner Music Nashville. This segment markets, distributes, and sells music and video products to retailers and wholesale distributors; independent labels to retail and wholesale distributors; and various distribution centers and ventures, as well as retail outlets, online physical retailers, streaming services, and download services. The Music Publishing segment owns and acquires rights to approximately one million musical compositions comprising pop hits, American standards, folk songs, and motion picture and theatrical compositions. Its catalog includes approximately 100,000 songwriters and composers; and various genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative, and gospel. This segment also administers the music and soundtracks of various third-party television and film producers and studios. The company was founded in 1929 and is headquartered in New York, New York.
How the Company Makes MoneyWMG generates revenue primarily through its Recorded Music and Music Publishing segments. In the Recorded Music segment, the company earns money from the sale and streaming of recorded music, licensing of recordings, and merchandising. This includes revenue from digital platforms like Spotify and Apple Music, physical sales, and performance rights. The Music Publishing segment makes money by licensing compositions for use in media, covers, and public performances, as well as collecting royalties from various sources. WMG also benefits from strategic partnerships with digital service providers and collaborations with other entertainment entities, which enhance its distribution capabilities and expand its revenue streams.

Warner Music Group Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q2-2025)
|
% Change Since: 4.25%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call highlights modest revenue growth in Recorded Music and Music Publishing, strong physical sales, and significant chart success, indicating effective A&R investments and technology initiatives. However, these are balanced by declines in adjusted OIBDA, ad-supported streaming, and challenges in China, which impact overall growth expectations.
Q2-2025 Updates
Positive Updates
Recorded Music Revenue Growth
Recorded Music revenue increased by 1%, driven by a 3% growth in subscription streaming. This indicates resilience in a challenging market.
Music Publishing Revenue Increase
Music Publishing revenue grew by 3%, with streaming revenue up by 2% due to digital deal renewals, reflecting strong performance in the publishing segment.
Physical Revenue Increase
Physical revenue increased by 2% due to strong releases in the U.S. and Japan, showcasing the enduring appeal of physical music formats.
Chart Success and Market Share
WMG's artists hold 5 of the top 10 tracks on the Billboard global chart. The company's share on the Spotify global chart has grown nearly 50% since mid-2023, indicating effective A&R investment.
Investment in Technology
Launch of WMG Pulse app, providing real-time insights for artists and songwriters, showing investment in tech to enhance artist services.
Negative Updates
Adjusted OIBDA Decline
Total company adjusted OIBDA decreased by 1%, and adjusted OIBDA margin decreased by 50 basis points, impacted by revenue mix.
Ad-supported Streaming Decline
Ad-supported streaming revenue declined by 3% due to a soft overall ad environment.
Challenges in China
Market share loss in China contributed to the challenging quarter, with expectations of continued trends affecting subscription streaming growth.
Artist Services and Expanded Rights Revenue Decline
Revenue decreased by 6% due to lower concert promotion revenue, primarily in France, and ongoing weakness in the e-commerce business.
Lower Subscription Streaming Growth Expectations
The company expects lower subscription streaming growth for the fiscal year, citing continued challenges experienced in the quarter.
Company Guidance
During Warner Music Group's fiscal second quarter earnings call for 2025, CEO Robert Kyncl highlighted key metrics reflecting the company's performance and strategic direction. The company's revenue increased by 1%, with Recorded Music revenue and Music Publishing revenue growing by 1% and 3%, respectively. Subscription streaming within Recorded Music also saw a 3% growth. However, the total company adjusted OIBDA decreased by 1%, and the adjusted OIBDA margin shrank by 50 basis points. Kyncl emphasized the company's focus on three strategic priorities: growing market share, increasing the value of music, and improving efficiency to drive long-term growth and profitability. He noted challenges such as a lighter release schedule, market share pressure in China, and a tough year-over-year comparison in subscription streaming growth. Despite these challenges, Kyncl expressed optimism due to successful new artist signings, strong chart performances, and ongoing technological investments, such as the launch of the WMG Pulse app.

Warner Music Group Financial Statement Overview

Summary
Warner Music Group shows strong revenue growth and profitability, with notable cash flow generation. However, high leverage and low equity ratio present financial risks that need careful management.
Income Statement
78
Positive
The income statement shows a positive trajectory for Warner Music Group with consistent revenue growth over the years, though there was a slight dip in the most recent TTM period. Gross Profit Margin remains robust at 46.8% in the TTM, indicating efficient production and cost management. Net Profit Margin is healthy at 7.1%, though slightly down from previous periods. EBIT and EBITDA margins are solid, indicating strong operational performance despite a competitive industry landscape.
Balance Sheet
70
Positive
The balance sheet indicates a relatively high Debt-to-Equity Ratio of 8.03, reflecting heavy leverage which poses a potential risk. However, the Return on Equity (ROE) is impressive at 79.7% for the TTM, suggesting that the company effectively uses shareholder funds to generate profits. The Equity Ratio is low at 5.9%, indicating a high reliance on debt financing which could impact financial stability in the long term.
Cash Flow
75
Positive
Cash flow analysis shows a positive Free Cash Flow Growth Rate of 28.8% in the TTM, indicating strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio is 1.97, suggesting efficient cash flow management. The Free Cash Flow to Net Income Ratio is 1.27, indicating that the company is generating more cash than net income, which is a positive sign for liquidity and financial flexibility.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue6.43B6.04B5.92B5.30B4.46B
Gross Profit3.07B2.86B2.84B2.56B2.13B
EBITDA1.09B1.16B1.20B915.00M-59.00M
Net Income435.00M430.00M551.00M304.00M-475.00M
Balance Sheet
Total Assets9.15B8.54B7.83B7.21B6.41B
Cash, Cash Equivalents and Short-Term Investments694.00M641.00M584.00M499.00M553.00M
Total Debt4.29B4.26B4.01B3.68B3.44B
Total Liabilities8.48B8.12B7.66B7.17B6.46B
Stockholders Equity518.00M307.00M152.00M31.00M-63.00M
Cash Flow
Free Cash Flow638.00M446.00M416.00M64.00M338.00M
Operating Cash Flow754.00M687.00M742.00M638.00M463.00M
Investing Cash Flow-311.00M-300.00M-824.00M-638.00M-219.00M
Financing Cash Flow-396.00M-325.00M188.00M-61.00M-316.00M

Warner Music Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price31.15
Price Trends
50DMA
27.91
Positive
100DMA
29.21
Positive
200DMA
30.46
Positive
Market Momentum
MACD
1.06
Negative
RSI
68.28
Neutral
STOCH
77.28
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WMG, the sentiment is Positive. The current price of 31.15 is above the 20-day moving average (MA) of 30.02, above the 50-day MA of 27.91, and above the 200-day MA of 30.46, indicating a bullish trend. The MACD of 1.06 indicates Negative momentum. The RSI at 68.28 is Neutral, neither overbought nor oversold. The STOCH value of 77.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WMG.

Warner Music Group Risk Analysis

Warner Music Group disclosed 43 risk factors in its most recent earnings report. Warner Music Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Warner Music Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
72
Outperform
$538.83M68.262.16%9.56%1088.00%
68
Neutral
$16.41B36.5989.20%2.31%-0.91%-14.87%
62
Neutral
$42.18B-1.56-12.06%2.81%2.10%-71.01%
47
Neutral
$1.93B168.75%-2.85%75.96%
42
Neutral
$1.93B259.47%-2.85%75.96%
41
Neutral
$1.86B19.96%-285.78%
40
Neutral
$31.13M-270.84%88.72%-85.53%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WMG
Warner Music Group
31.15
2.14
7.38%
LGF.A
Lions Gate Entertainment Class A
8.59
0.03
0.35%
LGF.B
Lions Gate Entertainment Class B
7.69
-0.20
-2.53%
ANGH
Anghami Inc.
0.45
-0.51
-53.13%
RSVR
Reservoir Media
8.00
-0.39
-4.65%
LION
Lionsgate Studios
6.54
-1.02
-13.49%

Warner Music Group Corporate Events

Private Placements and FinancingM&A TransactionsBusiness Operations and Strategy
Warner Music Group Forms Joint Venture with Bain
Positive
Jul 1, 2025

On June 29, 2025, Warner Music Group‘s subsidiary, WMG BC Holdco LLC, entered into a joint venture agreement with Bain Capital’s subsidiary to form Beethoven JV 1 LLC, focusing on acquiring and managing music catalogs. This venture, with a $500 million equity commitment and additional debt financing, aims to enhance Warner Music’s catalog acquisition capabilities. Additionally, Warner Music announced cost-reduction measures to save $300 million annually by 2026, including headcount reductions and administrative cuts, to reinvest in growth and improve operational efficiency.

The most recent analyst rating on (WMG) stock is a Hold with a $35.00 price target. To see the full list of analyst forecasts on Warner Music Group stock, see the WMG Stock Forecast page.

Dividends
Warner Music Group Declares Quarterly Cash Dividend
Positive
May 16, 2025

On May 16, 2025, Warner Music Group announced a regular quarterly cash dividend of $0.18 per share for its Class A and Class B Common Stock, payable on June 3, 2025, to shareholders recorded by May 27, 2025. This decision underscores Warner Music Group’s commitment to providing consistent returns to its investors, reflecting its stable financial performance and strategic positioning within the music industry.

The most recent analyst rating on (WMG) stock is a Hold with a $32.00 price target. To see the full list of analyst forecasts on Warner Music Group stock, see the WMG Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 09, 2025