Understanding the Valuation of Universal Music Group

This chapter explores the intrinsic value of Universal Music Group through the lens of its established music catalogs, which create reliable and growing revenue streams. It outlines the importance of discounting future cash flows and positions Universal as a high-quality investment choice despite its slow profit realization.

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Episode notes

In today’s episode, Shawn O’Malley (@Shawn_OMalley_) breaks down Universal Music Group’s stock and what the music industry looks like from music labels’ perspective.

You’ll learn why Universal Music Group is a more reliable bet on the music industry than Spotify, why music labels have such compelling economics, Bill Ackman’s rationale for owning Universal, how AI could impact the music industry, and whether Universal is currently undervalued, fairly valued, or overvalued, plus so much more!

IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

00:19 - Why Universal is a more reliable bet on the music industry than Spotify

03:44 - How streaming has increased the value of music rights

05:16 - What music labels do for artists

06:40 - What Universal’s advantage is as the largest global music label

07:44 -How Universal’s revenue streams breakdown

12:45 - Why Universal’s business is like selling shovels in a gold rush

18:30 - Why big stars still need music labels

18:50 - How Universal split off from Vivendi

20:40 - The risks from AI and Bill Ackman’s thoughts on AI

25:24 - What happened during Universal’s feud with TikTok

28:00 - What Universal’s health and wellness ambitions are for music

30:29 - Which challenges could hinder Universal the most

35:02 - How to value Universal like Bill Ackman

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
Bill Ackman’s presentation on Universal stock.
Music Streaming Royalties 101 article.
Check out the books mentioned in the podcast here.
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