Music has been a tough game to be in over the past year. Most musicians make the majority of their money from ticket sales, merchandise, and touring. With live music off the cards, one estimate has stated that the live music industry has lost USD $30 billion since the start of the pandemic.
The shake-up the pandemic has given the music industry will likely continue, meaning caution is more necessary than ever when looking to invest. However, look a little further and you’ll find serious opportunities are still out there.
Innovation from companies both big and small is everywhere. Music streaming has seen massive increases as people spend more time at home. Though live music will eventually return, live streaming of gigs and performances across the world have become increasingly popular––and they’re here to stay.
There are good options to choose from in this space if you’re looking to invest in music, especially in terms of larger publicly listed companies. These companies have the capacity and the durability to weather the particular storms of the past year and are set to further capitalise on the return of music as the pandemic eases.
We’ve partnered with the world’s leading social trading and investing platform eToro to explore five options worth taking a look at. For those looking to invest in or research any of the following stocks eToro is an excellent option, as it offers commission-free stocks trading on US-listed companies, plus useful information like in depth stats, research resources and social feeds for all companies available to invest in on its platform.
Without further adieu, here are five stocks that music-loving investors should consider investing in.
Tencent Music Entertainment Group ($TME)
Kicking off with a bit of a wildcard is Tencent. The entertainment conglomerate owns several music products that hold a massive 88 per cent market share in China. Reports show that the subscriptions to their platforms is still on the rise and the company reported a 14 per cent increase in profit in the fourth quarter of last year.
Having said this, the share price took a serious tumble in March after consecutive months of solid gains as the company got caught up in a regulatory tussle with the Chinese government. Chinese bank China Renaissance downgraded the stock, resulting in a 21% decline in share price. However, the company is still the largest streaming service in the country, and HSBC has raised its price target on them. There’s a lot to be gained here for bulls with the confidence to ride out any more regulatory spills and the current price dip could be a good one to cash in on.
Live Nation Entertainment ($LYV)
In a year when live music was closed, the global events company saw a huge decline in revenue which was then followed by an all-time high in share price. The disjointed nature of these moves reflects the fact that LNE is the biggest player in the business. It has enough purchasing power to spend its way through the crunch and hoover up some of the opportunities that present themselves as live music returns to the US.
While other smaller businesses have shut down, LNE can reap the rewards. They have also made significant moves in future-proofing themselves with the recent purchase of the live stream platform Veeps. As live streaming is set to continue as the pandemic rolls on across the rest of the world, it’s a smart move that could net them further gains. However, the company has taken on significant debt over the past year, while the share price has continued to climb and is potentially overvalued at the moment. In terms of returns, it’s worth taking a closer look here.
Sony Group ($SONY)
One of the biggest players in the music game, Sony Corp is a big beast with operations in consumer electronics, gaming, and film. Investing in Sony has to be considered as part of their whole operations and not just the music segment. Historically, they’ve had a good year, with the release of the PS5 bringing a lot of attention to the company, and share prices up ~60% year on year. The question is whether or not that growth will be sustainable.
There are good reasons to think so. Sony has revealed they’ve sold the PS5 at a loss and will be making concerted efforts to capture the gaming and online market. It’s a long term strategy here for both Sony and investors. They’ve also announced the move into the mobile gaming market by bringing many of their titles onto the small screen – a huge market, particularly in Asia. While the pandemic has been good for Sony, it’s uncertain whether the stay-at-home benefits will last as the pandemic eases. Sony is also still struggling to get PS5s to customers, so there are future supply chain issues to watch out for. Overall, it looks to be a strong year for Sony and it’s definitely a company worth looking into.
Spotify ($SPOT)
The Spotify ship may well have sailed if you’re looking for quick gains, however, as a long-term investment, Spotify looks interesting. The company has been making big moves in the podcast sector for some time and have just announced the purchase of Betty Labs, the company behind the live sports audio app Locker Room. They’re looking to expand their portfolio of apps in this field, with further integration of live-chat conversations that can be uploaded directly to Spotify.
The current stock price is seeing something of a correction after posting conservative estimates for its 2021 growth. There is still room for the price to decline even further, as some analysts suggest the stock has been overvalued for quite some time. However, some retail investors may see the value in buying Spotify stock whilst prices are historically low.
Facebook ($FB)
Not your average music investment but hear us out. Facebook has just launched a new app service called BARS. It’s essentially designed to be the TikTok of rap music. Users can create videos of up to a minute in length, choosing from a selection of hundreds of pre-recorded beats to record their own rhymes over. The app is geared towards up-and-comers and people looking to just have fun with music but has strong potential for significant uptake amongst rap fans.
Potential investors must remember that investing in FB is not just investing in their music service but in fact everything they offer. The price is also close to its current ATH, having seen strong growth over the past year. A long-term purchase for sure, but one that could have real potential.
