Music stocks are rising again: Spotify has tripled in value since mid-March, iHeartMedia is on the rebound, and even Live Nation is close to its 2020 peak. Some equity analysts think it’s time to stop the music, though.
As compared with an average of analyst price targets, four out of seven key music stocks — Spotify, Live Nation, iHeart and Tencent Music Entertainment — have more downside than upside. (The graph below lists the closing price of a stock on Dec. 14 and an average of its analyst price targets, along with the distance between them — the “upside” or “downside.”) In the case of Spotify, which is up 26.2% since June to $325.83 on Dec. 14, investors have been buying based on any news that suggests the company has a competitive advantage or improved margins. But 30 analysts who cover the stock gave it a combined average target of $232.63.
Live Nation shares closed at $70.35 on Dec. 14, almost where they traded on Feb. 24, when news of the coronavirus first seriously affected the U.S. stock market. Since a 2020 low of $21.70 on March 18, the stock is up more than 224%, driven by the expectation that vaccinations will save the 2021 concert season. Analysts have an average price target of $66.10, though.
Analysts don’t, however, think all music stocks are overvalued: Their average price targets for Warner Music Group, Madison Square Garden Entertainment and SiriusXM suggest significant upsides.