雅虎香港財經 10 Best Music Stocks to Buy Now
In this piece, we will take a look at the ten best music stocks to buy. For more stocks, head on over to 5 Best Music Stocks to Buy.
The music industry is made of dreams. Every day, thousands of artists look to make it big and bring in millions of dollars in royalty payments and create fan bases of thousands of people. Add to it the fact that music is also one of the oldest forms of entertainment known to humankind, with the first music made by prehistoric humans thousands of years ago. This was when members of the Ancient Chinese and the Indus Valley civilization used simple percussion instruments to create pleasant sounds.
Since then, the sector has evolved to the current day where we have countless different genres of music each suited to the listener's profile. Music has also evolved with human civilization, transforming from the classical era of the greats such as Beethoven and Mozart, to rappers such as 50 Cent and Eminem, and pop music sensations such as Taylor Swift and Katy Perry. At the same time, the growth in technology has also provided artists with a global audience, with singers in America having followers in every continent on the globe.
Cumulatively, these factors also lead to sterling evaluations for the music industry. For instance, the global music recording industry was worth $58.2 billion in 2022 and is expected to grow through a compounded annual growth rate (CAGR) of 9.9% between then and 2030 to sit at an estimated $123 billion by the end of 2030 according to research from Global Industry Analysts. Geographically speaking, America accounted for more than a quarter of the market last year, as it commanded $15.9 billion of the total revenues. And, as is the case with several other industries, China will be the fastest growing region moving forward. The country's music recording sector will outpace the broader market in terms of growth through a CAGR of 14.9% and account for another quarter of the industry in 2030 through a value of $29.7 billion. To add context to these growth figures, Mordor Intelligence estimates that the music market should have an 8.5% CAGR between 2019 and 2027.
While music recording has grown over the passage of time, the biggest disruption in the sector particularly due to the rise of the Internet and consumer technology has come in the form of music streaming. Piracy has been the thorn in the sides of record labels and artists, and it first picked up pace in the 2000s when file sharing sites such as LimeWire would see users buy compact disks (CDs), copy their data on computers, and share the music with the world - all for free. Since then, the streaming sector has come quite far, and lucrative subscription offers have brought more people into the fold of legal music access.
On this front, Grand View Research believes that the global music streaming market was worth $29.5 billion in 2021 and is expected to post a CAGR of 14.7% between 2022 and 2030 for a final value of $103 billion by the end of the forecast period. This will make it almost as valuable as the recording industry if we consider the estimates shared above. The research firm adds that subscriptions for music platforms grew during the coronavirus pandemic as lockdowns forced people to turn indoors for their entertainment. At the same time, high speed internet access, courtesy of fifth generation (5G) connectivity, is also stimulating the music streaming industry as more users can comfortably listen to their favorite tunes from the comfort of their homes. Within the streaming industry, on-demand products accounted for the largest market share in 2021, and looking at the future, live streaming is expected to slightly outpace the broader market by growing at a CAGR of 16% between 2022 and 2023.
Finally, while there are several music royalties and streaming companies that are publicly traded stocks, with large technology firms such as Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN) also having their streaming divisions, there are no publicly traded stocks when it comes to musical instrument manufacturing companies. Two of the world's most popular instrument companies, Fender and Gibson, are both private and while Yamaha is publicly traded, it is not a pureplay instruments maker as it also makes other products such as motorcycles.
One of the biggest music streaming companies in the world is Spotify Technology S.A. (NYSE:SPOT) which has more than a hundred million tracks on its platform and serves almost half a billion people worldwide. The firm's chief executive officer, Mr. Daniel Ek, commented on its decision to invest during a tumultuous 2022 during Spotify's fourth quarter of 2022 earnings call where he stated:
So, by the end of the year, we had more than 100 million tracks on our platform and more than 5 million podcasts and more than 300,000 audio books being enjoyed by almost 0.5 billion listeners. In 2021, we said that 2022 would be an investment year, and it was. And in light of our recent news on cost and staff reductions, I’m sure some of you are wondering if we believe that, that investment was a mistake. And the answer is, no and yes. I still believe it was the right call to invest, and I would do it again. So, for instance, in the last 12 months, we grew our users substantially, enhanced our capabilities, developed a better product and brought more content to creators and users around the world. And we also made tremendous strides in setting Spotify Park from everyone else in our space. In addition, my expectation was never that these investments would have a great impact in the short term, yet they have. But more importantly, for our share owners, I fully expect that they will continue to pay dividends in the months and years to come. But things change, and the macro environment has changed significantly in the last year. And in hindsight, I probably got a little carried away and overinvested relative to the uncertainty we saw shaping up in the market. So, we are shifting to focus on tightening our spend and becoming more efficient. This remains consistent with the plan we outlined at Investor Day, but you should expect us to execute on it with even greater intensity given what I just said. However, to be clear, this doesn’t mean we’re changing our strategy.
With these details in mind, let's take a look at some great music stocks, out of which some top picks are NetEase, Inc. (NASDAQ:NTES), Warner Music Group Corp. (NASDAQ:WMG), and Spotify Technology S.A. (NYSE:SPOT).
Photo by Denisse Leon on Unsplash
Our Methodology
To compile our list of the best music stocks, we looked at firms that either have large music subsidiaries, particularly those that stream music, generate royalties, or operate as record labels. This led us to eliminate both Apple and Amazon since while the pair have music streaming divisions, they are nevertheless different kinds of businesses as a whole. At the same time, Dolby Laboratories, Inc. (NYSE:DLB) and Sonos, Inc. (NASDAQ:SONO) are not included since they are located at the periphery of the music industry and are not essential players. Some non-American stocks are also included, and these are mentioned at the bottom of the list, with firms traded on U.S. markets ranked according to hedge fund sentiment courtesy of Insider Monkey's 943 hedge fund survey for Q4 2022.
Best Music Stocks to Buy Now
10. Hipgnosis Songs Fund Limited (LON:SONG.L)
Number of Hedge Fund Investors In Q4 2022: N/A
Hipgnosis Songs Fund Limited (LON:SONG.L) is a British company that is based in Guernsey. The firm is one of the biggest music royalty firms in the U.K, with more than $2 billion in music rights and income sources. It aims to provide investors with access to a portfolio of music rights and create music as its own asset class. For the six months that ended in September 2022, Hipgnosis Songs Fund Limited (LON:SONG.L) posted $91.7 million in revenue for a 7.5% annual growth.
Warner Music Group Corp. (NASDAQ:WMG), NetEase, Inc. (NASDAQ:NTES), and Spotify Technology S.A. (NYSE:SPOT) are met by Hipgnosis Songs Fund Limited (LON:SONG.L) in our list of big music companies.
9. Vivendi SE (OTCMKTS:VIVHY)
Number of Hedge Fund Investors In Q4 2022: N/A
Vivendi SE (OTCMKTS:VIVHY) is a French company that is headquartered in Paris, France. The firm owns the Universal Music Group, which is an American firm organized under Dutch law. Universal Music is one of the older music companies since it was initially set up in 1934. The firm has dozens of music labels in its portfolio, with some of these being Abbey Roads, Decca Records, EMI, and Interscope.
8. Reservoir Media, Inc. (NASDAQ:RSVR)
Number of Hedge Fund Investors In Q4 2022: 9
Reservoir Media, Inc. (NASDAQ:RSVR) is an American firm headquartered in New York, New York. It both records and publishes music.
By the end of last year's fourth quarter, nine of the 943 hedge funds profiled by Insider Monkey had held a stake in Reservoir Media, Inc. (NASDAQ:RSVR). Out of these, Howard Marks's Oaktree Capital Management is the firm's largest investor with a $4.9 million stake.
7. Tencent Music Entertainment Group (NYSE:TME)
Number of Hedge Fund Investors In Q4 2022: 18
Tencent Music Entertainment Group (NYSE:TME) is a Chinese company headquartered in Shenzhen. The firm operates a music streaming platform, which also lets performers and audiences connect with each other.
18 of the 943 hedge funds part of Insider Monkey's Q4 2022 database had invested in the firm. Tencent Music Entertainment Group (NYSE:TME)'s largest investor in our database is Josh Overdeck and David Siegel's Two Sigma Advisors with a $60.4 million stake.
6. Sirius XM Holdings Inc. (NASDAQ:SIRI)
Number of Hedge Fund Investors In Q4 2022: 26
Sirius XM Holdings Inc. (NASDAQ:SIRI) is an American firm headquartered in New York, New York. It operates a music streaming platform.
As of December 2022, 26 of the 943 hedge funds polled by Insider Monkey had bought Sirius XM Holdings Inc. (NASDAQ:SIRI)'s shares. Stuart J. Zimmer's Zimmer Partners is its largest investor in our database with an $18 million stake.
NetEase, Inc. (NASDAQ:NTES), Sirius XM Holdings Inc. (NASDAQ:SIRI), Warner Music Group Corp. (NASDAQ:WMG), and Spotify Technology S.A. (NYSE:SPOT) are some top music stocks according to hedge funds.
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Disclosure: None. 10 Best Music Stocks to Buy Now is originally published on Insider Monkey.
