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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:71Outperform
Price Target:
$35.00
▲(7.59% Upside)
Warner Music Group's overall stock score is driven by strong earnings call performance and positive technical analysis, indicating growth potential. However, high leverage and valuation concerns slightly offset these strengths.
Positive Factors
Cost Savings
A strategic restructuring program is expected to deliver annualized run rate savings of $300 million by the end of FY27.
Earnings
Warner Music Group reported solid F3Q25 results which were above revenue and adjusted OIBDA expectations.
Streaming Revenue
Recorded Music digital streaming revenue exceeded forecasts and is a key contributor to the positive share reaction.
Negative Factors
Foreign Exchange Losses
Our EPS falls as a result of FX swings incl. losses on euro-denominated debt in Q3.
Market Headwinds
WMG has been mired by several unexpected headwinds over the last 12-18 months, leading to downward estimate revisions and shares trading near trough multiples.

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:Aug 07, 2025
(Q3-2025)
|
% Change Since: 8.29%|
Next Earnings Date:Nov 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong overall performance with notable revenue growth, market share gains, and strategic initiatives such as the joint venture with Bain Capital. However, there were challenges in cash flow and ad-supported streaming revenue, as well as market share issues in some regions.
Q3-2025 Updates
Positive Updates
Strong Revenue Growth
Total revenue increased 7% with a broad-based reacceleration in growth across Recorded Music and Music Publishing. Adjusted revenue growth was 8%.
Market Share Gains
Recorded Music market share increased roughly 1 percentage point year-over-year in the U.S. as per Luminate Data. The company has seen improvement globally across EMEA, APAC, and LatAm.
Successful Artist Releases
Warner artists held half of the top 10 on Spotify's global chart for 12 weeks and have 7 of the top 20 spots on Billboard Global 200. Artists like Alex Warren and Sombr reached significant chart positions.
Music Publishing Growth
Music Publishing revenue increased 9%, driven by growth across performance, mechanical, digital, and sync revenue.
Cost Savings Initiative
A strategic reorganization plan is expected to generate $300 million in cost savings by the end of fiscal 2027, enabling margin expansion of 150 to 200 basis points by fiscal 2026.
Joint Venture with Bain Capital
A $1.2 billion JV with Bain Capital was announced to purchase catalogs, expanding buying power and accelerating M&A initiatives.
Increased Dividend
Warner Music Group has increased its quarterly dividend to $0.19 per share, a 6% increase, marking the fifth consecutive year of dividend growth.
Negative Updates
Free Cash Flow Decline
Free cash flow decreased to $7 million from $160 million in the prior year quarter, primarily due to greater investment in A&R.
Ad-Supported Streaming Decline
Recorded Music streaming revenue from ad-supported sources declined by 2%, with challenges particularly in short-form media content.
Operating Cash Flow Decrease
Operating cash flow decreased to $46 million from $188 million in the prior year quarter, with a conversion rate of 12% of adjusted OIBDA.
Challenges in China and Japan
Despite progress globally, Warner Music Group acknowledged significant work needed to improve market share in China and Japan.
Company Guidance
During Warner Music Group's third-quarter earnings call for fiscal year 2025, the company reported a 7% growth in total revenue, with notable growth across both Recorded Music and Music Publishing sectors. Recorded Music subscription streaming revenue saw an adjusted increase of 8.5%, driving an overall 6% growth in Recorded Music revenue. Warner Music Group achieved a 1 percentage point increase in U.S. market share, according to Luminate Data, and maintained strong chart performance globally. The company announced a strategic reorganization plan aiming for $300 million in cost savings by fiscal year 2027, alongside a joint venture with Bain Capital to invest $1.2 billion in music catalogs. The call also highlighted ongoing efforts to collaborate with digital streaming partners on superfan tiers and emphasized Warner Music's commitment to embracing AI in ways that protect artist rights. The company's adjusted OIBDA increased 16%, with a margin expansion of 170 basis points to 22.1%, and it announced a 6% increase in its quarterly dividend.

Warner Music Group Financial Statement Overview

Summary
Warner Music Group shows strong revenue growth and profitability, with impressive cash flow generation. However, high leverage and a low equity ratio pose potential 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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue6.47B6.43B6.04B5.92B5.30B4.46B
Gross Profit3.02B3.07B2.86B2.84B2.56B2.13B
EBITDA949.00M1.09B1.08B1.20B884.00M-59.00M
Net Income297.00M435.00M430.00M551.00M304.00M-475.00M
Balance Sheet
Total Assets9.78B9.15B8.54B7.83B7.21B6.41B
Cash, Cash Equivalents and Short-Term Investments527.00M694.00M641.00M584.00M499.00M553.00M
Total Debt4.62B4.29B4.26B4.01B3.68B3.44B
Total Liabilities8.96B8.48B8.12B7.66B7.17B6.46B
Stockholders Equity589.00M518.00M307.00M152.00M31.00M-63.00M
Cash Flow
Free Cash Flow432.00M638.00M446.00M416.00M64.00M338.00M
Operating Cash Flow751.00M754.00M687.00M742.00M638.00M463.00M
Investing Cash Flow-383.00M-311.00M-300.00M-824.00M-638.00M-219.00M
Financing Cash Flow-460.00M-396.00M-325.00M188.00M-61.00M-316.00M

Warner Music Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price32.53
Price Trends
50DMA
29.16
Positive
100DMA
28.88
Positive
200DMA
30.43
Positive
Market Momentum
MACD
0.73
Negative
RSI
69.69
Neutral
STOCH
90.33
Negative
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 32.53 is above the 20-day moving average (MA) of 30.86, above the 50-day MA of 29.16, and above the 200-day MA of 30.43, indicating a bullish trend. The MACD of 0.73 indicates Negative momentum. The RSI at 69.69 is Neutral, neither overbought nor oversold. The STOCH value of 90.33 is Negative, 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 (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$16.81B57.0654.66%2.21%1.36%-45.79%
66
Neutral
$499.56M66.842.09%9.65%38433.33%
60
Neutral
$44.04B1.92-11.93%4.00%2.47%-38.33%
47
Neutral
$1.93B168.75%-2.85%75.96%
42
Neutral
$1.93B259.47%-2.85%75.96%
41
Neutral
$1.90B19.96%432.48%-930.72%
41
Neutral
$22.00M-270.84%88.72%-85.54%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WMG
Warner Music Group
32.53
4.97
18.03%
LGF.A
Lions Gate Entertainment Class A
8.59
0.57
7.11%
LGF.B
Lions Gate Entertainment Class B
7.69
0.56
7.85%
ANGH
Anghami Inc.
3.27
-5.05
-60.70%
RSVR
Reservoir Media
7.62
0.27
3.67%
LION
Lionsgate Studios
6.25
-0.85
-11.97%

Warner Music Group Corporate Events

Business Operations and StrategyFinancial Disclosures
Warner Music Group Reports 9% Revenue Increase
Neutral
Aug 7, 2025

Warner Music Group reported a 9% increase in total revenue for the fiscal third quarter ended June 30, 2025, driven by gains in recorded music and music publishing. Despite a net loss of $16 million, the company saw an 18% increase in Adjusted OIBDA, reflecting its strategic focus on market share gains and efficiency. The announcement highlights Warner’s commitment to investing in music and expanding its global impact, although challenges such as increased restructuring costs and a decrease in operating income were noted.

The most recent analyst rating on (WMG) stock is a Sell with a $28.00 price target. To see the full list of analyst forecasts on Warner Music Group stock, see the WMG Stock Forecast page.

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: Aug 14, 2025