Shares in the Warner Music Group were up 20.5% on the NASDAQ stock exchange at the close of trading Wednesday (June 3), its first day on the market as a public company under Len Blavatnik’s Access Industries. After being priced at $25 this morning, in line with its projected $23-$26 IPO price, and opening at $27, it finished the day at $30.12, according to MarketWatch, for a market capitalization of $15.36 billion and an enterprise valuation of $17.85 billion, when debt is included.
That far outpaced the market as a whole, with the NASDAQ up less than 1%, the S&P up just over 1% and the Dow Jones up 2% for the day.
By having an initial price at $25, WMG was valued at $12.75 billion coming into the day — the largest stock offering so far this year — just nine years after billionaire Blavatnik’s Access bought a then-public WMG in 2011 for $3.3 billion and took the company private in the midst of an industry downturn.
Now, with streaming buoying the business back to growth over a period of several years, Warner took a big step in a market that will eventually see the Universal Music Group — the largest record company in the world — go public by 2023.
Shares in WMG traded over the $25 mark all day, fluctuating mostly between $28 and $30 — hitting a peak of $30.85 just after 3:30pm — before settling out at $30.12. The $17.85 billion enterprise figure values WMG at approximately a 23.7 times 2019 EBITDA multiple, almost in line with the 24.9 times 2019 EBITDA multiple that Tencent paid for a 10% stake in UMG in a deal finalized on New Year’s Eve.
As of now, Warner is the only pure-play major music company on the market in either North America or Europe; its major competitors, UMG and Sony Music, are part of conglomerates Vivendi and Sony Corp., respectively, while BMG — which is nearing fourth major status — is a division of Bertelsmann.
Warner’s IPO comes just over two years after the last major music-business public listing, when Spotify debuted on the New York Stock Exchange in April 2018. Spotify’s debut, which came as a direct listing rather than an IPO, was one of the largest for a tech company in the history of the NYSE, and closed its first day with a $26 billion valuation.
In other Warner news, the Warner Music Group and the Blavatnik Family Foundation announced Wednesday the creation of a $100 million fund to “support the music community and groups promoting social justice,” a move which comes amid more than a week’s worth of protests against police brutality and systemic racism following the murder of George Floyd by police in Minneapolis on May 25. WMG CEO Stephen Cooper said, “We’re determined to contribute, on a sustained long-term basis, to the effort to bring about real change,” in a statement announcing the fund.
