How Universal Music Stock made its first week

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Shares opened at 25.25 euros ($ 29.59) before peaking at 26.45 euros ($ 30.99) – a market cap of $ 56.2 billion – and ending the day at 25.10 euros ($ 29.41). During the week, the stock price fell slightly and traded from a low of 22.74 euros ($ 26.65) to 25.25 euros ($ 29.59). On Monday, September 27, UMG’s fifth trading day, the stock closed at 23.65 euros ($ 27.71), giving the company a market capitalization of 42.9 billion euros (50.3 billion euros). dollars).

The success of the public listing, however, did not come as a surprise. Prior to UMG’s listing, most financial analysts who covered Vivendi estimated the company to be worth between 39 and 42 billion euros ($ 49.2 billion), or about 21.50 euros ($ 25.21) at 27.15 euros ($ 31.81) per share. If UMG shares traded around these prices in the first week of trading, the company’s market cap – the total value of all outstanding shares – would have been in line with analysts’ calculations. Following the listing, five analysts who launched the UMG hedge had an average price target of 27.50 euros ($ 33.22), which is 17% above Friday’s closing price.

Still, relatively few shares have traded so far and the UMG share price could fluctuate as the market becomes more liquid. In the first four days, UMG’s trading volume was 75 million shares out of 1.8 billion shares outstanding and 756 million available for trading. (By comparison, when Warner Music Group went public in June 2020, its owner, Access Industries, launched 70 million shares. The volume traded on the first day alone was 35 million, or half of all shares on The market.) A share price that remains well above 18.50 euros ($ 21.64) could prompt many more new UMG shareholders to sell in the coming weeks. As a result, more shares on the stock exchange would help satisfy investors who want to buy UMG shares but don’t want to inflate the price if supply is insufficient for demand.

The legacy of UMG’s listing could linger for years and transform who finances and owns the rights to recordings and compositions. Since illegal file sharing decimated the music industry in the 2000s, streaming and other licensing opportunities have made a comeback over the past five years, rekindling investor interest in music and encouraging a large number of companies to go public. WMG and Round Hill Music Royalty Fund listed on the Nasdaq and the London Stock Exchange respectively in 2020, and earlier this year Reservoir Media and Believe entered the public markets.

Now that other music companies are planning to go public, they will have UMG’s landmark debut to highlight before they test the waters. This will fund future acquisitions and give existing shareholders an exit plan, which means more big salaries for executives and lucrative deals for rights holders.

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