It’s a tough time to be a publicly traded music company.
Often the bellwether for the music industry, Universal Music Group’s (UMG) stock is down nearly 35% so far in 2026, trading at 14.27 euros ($16.20). Though an entirely different kind of music company, Spotify’s stock is also down — 15% to $487.38 per share — while another publicly traded major, Warner Music Group, has seen its share price decline by around 9% to $27.61, all as of Sept. 30.
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Music companies are not the only publicly traded media and entertainment outfits experiencing a down year: Disney’s stock is down 6%, Comcast is down 21% and Netflix is down 23.5%. But UMG’s sharp 25% one-day share price decline on July 31 following its first-half earnings results shows investors’ broad unease with music stocks, financial analysts say.
“Entertainment and media is not seen as an AI winner, and if you’re not an AI winner, then you’re not doing well in this market,” says TD Cowen senior analyst Doug Creutz, adding this is the broadest downward trend he has seen for the entertainment and media sector in 20 years. “Having said that, there are some specific things at Universal that have frustrated investors, while Warner has been having great financial results and has not been rewarded for it.”
In recent years, both companies’ business plans included cost cuts and negotiating more favorable licensing agreements with their streaming partners. But in the past few quarters, Warner has expanded margins, and Universal has not. Sony Music Entertainment is protected from investor scrutiny to some degree because of its inclusion in the broader Sony Group Corporation, which is typically judged by its largest business, the game and network services division.
Creutz, who has buy ratings on all three companies, predicted in a research note this spring that increases in the minimum rates the digital streaming partners pay labels should boost their streaming revenue.
“This should have been their year,” Creutz says.
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Instead, UMG’s subscription streaming revenue decelerated in the second quarter from the first quarter to 6.7% revenue growth compared to 7.9% in the first quarter. Operating margin declined to 14.55% from 16.1% in the first six months of 2025 on a 5% drop in operating income.
UMG CFO Matthew Ellis said in July that there were aspects of their financial results that “we’re not satisfied with and already at work to improve. We’re confident that our strategic plan will drive healthy top- and bottom-line growth over a multiyear horizon.”
Rothschild & Co Redburn analyst Ed Vyvyan, who has a sell rating on UMG, says investors understand the business, but they’re reassessing the value of the stock.
“The kind of profit and margin that was initially expected at Universal’s IPO is not necessarily the type of profit and margin that is being indicated at the moment by performance,” Vyvyan tells Billboard.
With streaming growth slowing, each of the majors has sought to develop, among other businesses, their music distribution offerings. However advantageous it will be in the long run, Vyvyan says UMG’s acquisition of Downtown dilutes its profit margins in the short term. For better or for worse, WMG may be benefiting from its persistent issues in building out its own distribution offering under the ADA banner, which has lagged behind its competitors for years — but means its own margins from its label business remain stronger for now.
“If you are signing artists on a legacy deal and collecting royalties where you own most of it after the recoupment, or you’re collecting royalties for an artist where you’re just distributing for them,” Vyvyan says, “the margin profile and the cash return on that revenue is significantly lower in the distribution world than it was in the legacy label.”
The acquisition of Downtown; investing in artificial intelligence; catalog deals; and signing artists on more generous terms are good steps to take to prepare UMG for the future, Vyvyan says. But David Schulhof, CEO and founder of the global music industry exchange-traded fund MUSQ, said investors are impatient for major labels to uncover strong sources of revenue outside of what they get from streaming services.
“If you’re a content owner, like UMG or WMG, I think you’re worried today,” Schulhof tells Billboard. “They can’t just be dependent on Spotify revenue. That is a melting ice cube. They need to own everything or be a partner with the artist on everything.”
While labels could obviously benefit from gaining a share of touring, merchandise and/or endorsement revenues, it is unlikely artists will agree to resurrect the multi-rights contracts, or 360 deals, seen during the piracy era of the 2000s and early 2010s, analysts say. From superstar artists like Bad Bunny and Megan Thee Stallion to talent just bubbling up, a growing share of artists are favoring distribution deals over traditional record label contracts.
“There’s pressure basically coming from the broader industry, from artists, from what’s happening with social media and the internet,” Vyvyan says. “They are caught in crosswinds.”
A version of this story appears in the Oct. 3, 2026, issue of Billboard.
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