European stocks bounce back on success of UMG market debut

Universal Music Group enjoys successful market debut, buoys European stocks

European stocks looked set to reverse the momentum of the previous three days’ trading and close higher on Tuesday, with confidence partly boosted by Universal Music Group’s (UMG’s) successful market debut. 

The pan-European Euro Stoxx 50 and 600 had slumped by 2.1% and 1.7% at the start of the week, weighed down by concerns that the potential collapse of Evergrande Group, a leading Chinese property company, could wreak havoc on global market confidence.

UMG debut signals revitalised industry

With such fears subsiding for the time being, UMG saw its stock price jump by as much as 40% in its Tuesday debut on the Euronext exchange in Amsterdam. 

For years, the internet and rapid improvement in technology were thought to be the death knell of the music industry. Although independent labels have struggled to keep their heads out of the water, the rise of streaming services and platforms such as TikTok have in fact revitalised the world’s music giants. 

The likes of Sony Music, Warner Music and Universal Music have all been able to better capitalise on their substantial copyright catalogue. Indeed, in recent years, UMG has proved to be a leading driver of growth for its parent company and majority stake owner, French conglomerate Vivendi. 

UMG stock soars

In initial trading, the Universal stock rose as high as €25.77, giving its a market capitalisation of €46.67bn ($54.7bn). On Monday, the company had given it a reference price of €18.50. 

Following the successful listing, Lucian Grainge, the chairman and CEO of UMG, stated: “Today's listing marks an exciting milestone in UMG’s storied history, reflecting our position as the world’s leading music-based entertainment company and our deep commitment to our amazing artists, songwriters and partners.

“We offer our thanks to the team at Euronext Amsterdam for their work on this listing, and look forward to a great partnership together.”

Vivendi dips following spin off

The spin off will had 60% of Universal shares to Vivendi shareholders, with Vivendi itself retaining 10% of the company and US billionaire Bill Ackman and Chinese media giant Tencent retaining substantial stakes. 

Vivendi itself traded down by just over 20% before the closing bell at €10.34. 

Among Europe’s leading indices, the CAC 40 and DAX enjoyed the largest gains, both trading up by 1.1%. 

Further reading: Universal Music Group: Is it worth a punt?

Further reading: WMG stock forecast: How is Warners responding to the Universal IPO?

Further reading: Asian stocks mixed amid Evergrande uncertainty

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