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Warner Music Group Corp. (NASDAQ:WMG) shares have tumbled to a 52-week low, touching down at $26.34, as market headwinds continue to challenge the entertainment sector. The $13.75 billion market cap company, currently trading at a P/E ratio of 30.8x, has caught the attention of InvestingPro analysts, who note the stock is trading below its Fair Value. This latest price level reflects a significant retreat from previous valuations, underscoring a broader trend of investor caution. Over the past year, WMG has seen its stock price erode by 13.19%, a stark contrast to the more buoyant performance seen in earlier quarters. Despite the downturn, the company maintains a 2.71% dividend yield and has raised its dividend for five consecutive years, according to InvestingPro data. The decline to this year-long low point signals a period of reassessment for shareholders as they weigh the company’s prospects amidst shifting industry dynamics and consumer habits. Discover 6 more exclusive ProTips and comprehensive analysis in the Pro Research Report.
In other recent news, Warner Music Group reported its second-quarter earnings for 2025, revealing a notable miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.07, significantly below the anticipated $0.29, and revenue of $1.48 billion, falling short of the expected $1.52 billion. These results prompted Goldman Sachs to downgrade Warner Music Group from "Buy" to "Neutral" and reduce the stock’s price target from $35.00 to $28.00. The downgrade was attributed to weaker-than-expected growth in subscription and ad-supported streaming revenues, along with a revised outlook for the fiscal year 2025.
Warner Music Group’s management has adjusted its forecast for subscription streaming revenue growth, now expecting approximately 3% year-over-year growth, down from the previously anticipated 7%. The company cited challenges such as a lighter release slate and market share loss in China as contributing factors. Additionally, the company’s adjusted OIBDA margin decreased by 1%, reflecting operational challenges.
Despite these hurdles, Warner Music Group remains focused on cost savings and strategic investments in technology and artist development. The company also highlighted its strong presence in key markets like the US, Mexico, and Brazil. Looking forward, Warner Music expects the trends from Q2 to persist throughout the fiscal year, with continued challenges in subscription streaming growth.
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