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These Music Stocks Are Hitting High Notes

Hassan Maishera - December 17, 2019

music stocks

The music sector is always changing. Previously, the music industry focused on recording albums, conventional radio, and other legacy formats. However, advances in technology put digital formats and subscription streaming platforms at the heart of the business. The streaming music stocks have taken center stage, but some traditional media companies are still big players.

Picking the best music stocks is not an easy feat because the industry moves fast. However, some music stocks are well-positioned to lead the sector for years to come. Here, we’ll highlight the best music stocks money and tell you why they’re the best. Stay tuned, because these music stocks are ready to rock.

Music Stocks Hitting High Notes: Our Top Picks

For the leading music stocks, we focused on those large companies based in the United States. However, these companies operate internationally too and they have subscribers all over the world. These music industry stocks could be major players for decades.

Spotify Technology SA (SPOT)

Spotify is a Sweden-based music streaming stock, but it lists in the U.S. on the NYSE. The company provides digital music, podcast, and video streaming services. They allow millions of subscribers around the world to access songs and other content from artists all over the world.

At the moment, Spotify is the largest music streaming platform in the world, with over 35% market share of the sector. The company records over 200 million active users per month, with more than 100 million active subscribers.

music stocks - spotify
Spotify is based in Stockholm, Sweden, but it’s one of the most popular streaming music services on the planet.

Spotify recently began a push into podcasts. The company invested heavily to support podcast listeners and encourage other users to tune in. So far, they’ve introduced several features that make it easier for users to enjoy podcasts.

A new button on free users’ homepages asks subscribers to pick topics of interest. Then, Spotify provides podcast recommendations based on their interests. Spotify offers the feature in most countries, including the US, Canada, and Mexico. However, it could go global in the future.

Spotify also launched Alexa-enabled podcasts recently. Now, users can use Alexa to pull up their favorite podcasts. If Spotify continues dominating the podcast and music streaming markets, share prices could rise significantly over the coming years.

Sirius XM Holdings Inc. (SIRI)

Sirius XM is one of the largest audio entertainment companies in the world. The New York-based broadcasting company provides satellite radio and streaming music services to users in the United States and abroad. Users from all over the country can access the contents available on Sirius.

Sirius drastically increased its reach when it acquired Pandora Media. With over 100 million people using its audio products and services, Sirius has become the largest audio entertainment company in the US.

The growth of Sirius didn’t stop with the number of users; the revenues generated by the company have been increasing. The company saw its subscription revenue increase from $4.2 billion in 2016 to $4.6 billion in 2018. With the acquisition of Pandora Media in 2019, the revenue by Sirius is expected to rise even higher.

Sirius continues its efforts to expand its portfolio. The company is making exclusive partnerships a lynchpin part of its strategy. It recently landed a deal with Rolling Loud, the largest Hip Hop festival brand in the world, in an effort to further its reach.

Sirius audios are available on multiple devices such as SiriusXM Radios, Roku, appliances, the SiriusXM mobile app, Google Assistant, smart TVs, Amazon AMZN Alexa, Apple, and more.

Tencent Music Entertainment Group (TME)

Tencent Music Entertainment Group is a joint venture by Spotify and Tencent, two of the largest media companies in the world. The company creates music streaming services for the Chinese market.

The fact that Tencent Music is the leading audio streaming service platform in the world’s most populous country makes it a stock worth looking at. It operates four popular and innovative music apps in China. They are; QQ Music, Kugou Music, Kuwo Music, and WeSing.

The number of people using Tencent Music’s app is over 800 million, with more than 120 million of them active subscribers. With such a large number of subscribers, it is not surprising that Tencent Music currently controls over 75% of the Chinese music streaming market.

After dominating the Chinese market, Tencent Music is looking to expand. Tencent is looking to expand its services to neighboring Asian countries, Thailand, Indonesia, and Malaysia. Tencent Music hopes to monetize virtual gifts and gain more paid subscribers in those countries.

Similarly, Tencent Music is looking to promote more artists from outside China. The company sold nearly six million copies of Taylor Swift’s new digital album, Lover, within 24 hours. It sees growth in the market and could take advantage of it.

Cirrus Logic, Inc. (CRUS)

Cirrus Logic is one of the largest manufacturers of audio processors in the world. Although not involved in providing music streaming services to people, it manufactures audio processors that help in making the music.

The Austin-based company’s audio processors and audio converters are used in audio and consumer entertainment products. Some of these products include smartphones, tablets, digital headsets, automotive entertainment systems, home-theater receivers, and smart home applications, such as smart speakers.

Cirrus is a music stock to consider because it has over 3,200 customers, including SiriusXM, and tech giants like Sony, Ford, Itron, LG, Lenovo, Onkyo, Marantz, Motorola, and Samsung.

The global trend is shifting to mobile stereo, and Cirrus’s entry into the market will see its progress in the coming years. The launch of its CS35L41 Smart Power Amplifier in 2019 is a welcome development. The amplifier boosts audio on smartphones when listening to music, streaming video, and gaming.

The entry into new markets and its expanding customer base makes Cirrus a music store you could consider. The stock hit high notes last year and could continue to do so.

Apple (AAPL)

Apple Music delivers streaming music to millions of subscribers in over one hundred countries globally. The platform also includes the Internet radio station Beats 1.

Since its creation in 2015, Apple Music’s worldwide subscribers have increased from 6.5 million in the first year to reach 60 million by 2019. The 28 million paid Apple Music subscribers in the US eclipses the 26 million Spotify has in the country. The figure is expected to grow both locally and internationally over the coming years.

music stocks - apple music
Surprisingly, Apple Music has more U.S. subscribers than Spotify.

One major disadvantage of the Apple Music platform is that it doesn’t come pre-installed in iPhones, of which there are over 900 million devices currently in use around the world. However, Verizon, the largest telecom carrier in the US, bundles free Apple Music subscription with some of its service plans. This is a significant advantage for Apple Music as its subscription reaches more people in the US via Verizon.

Apple Music launched the B2B version of the software, called Apple Music for Business. The Apple Music for Business, which was launched in partnership with brand-engagement firm PlayNetwork, is designed for retailers, restaurants, and other businesses that wish to play licensed music.

The Apple Music for Business could significantly increase Apple Music’s market share in the US over the coming years.

Amazon Music Unlimited and Prime Music (AMZN)

The Amazon Music Unlimited, popularly known as Amazon Music, is a music streaming platform and online music store owned and operated by the retail giant, Amazon. The platform, which can be accessed via web browsers, has become one of the fastest-growing music platforms in the US.

As of April 2019, Amazon had over 32 million subscribers across both Prime Music and Amazon Music Unlimited. That’s a 13% share of the US streaming music market. While it’s still well behind Spotify and Apple Music, Amazon recorded substantial growth over the past two years.

The Amazon platforms could grow faster now that the company is offering a free streaming music option. Previously, streaming service was only available to Prime members and Echo users. Now, ad-supported streaming is available free on iOS, Android, and Fire TV.

Amazon Music’s free option should help it gain more subscribers over the coming years.

Sony Music Entertainment (SNE)

Sony Music is a global music conglomerate owned by Sony Corporation. It is one of the largest music companies in the world, controlling several brands under its corporation. The firm controls dozens of labels, including Sony Classical, Provident Label Group, RCA Inspiration, Sony Music Latin, Columbia Records, and many more.

The company has three major components; recording music, music publishing, and visual media and platform. The recorded music and visual media and platform ventures rake in billions of dollars annually, while they also make substantial revenue from the music publishing business.

Sony hopes podcasts could become a high-growth business in the future. The company is venturing into the industry and recently began offering podcasts from different parts of the world.

Similar to the other big brands, Spotify and Apple Music, Sony has been making strategic moves to enter gain market share in the podcast industry. The company made an investment in a podcast production company and it hopes the move will bolster its non-music programming lineup.

Avid Technology, Inc. (AVID)

This is a Massachusetts-based tech and multimedia company that specializes in audio and video. The company specializes in providing music and video services such as video editing software, audio editing software, digital non-linear editing (NLE) systems, and music notation software. They manage and distribute these services to several companies and brands around the world.

Avid Technology has always been focused on empowering artists to distribute their music. Using the various Avid platforms, artists can do that. AvidPlay, a new music distribution service launched by the company, allows artists, producers and music labels to quickly and affordably share their music on popular streaming platforms like Spotify, Google Play Music, Pandora, Amazon Music, and more.

The AvidPlay has recorded hundreds of thousands of subscribers in its first few months and could be set to increase. Other creative tools developed by Avid Technology include Pro Tools | First, Media Composer | First, Sibelius | First, and more. These tools make it easy for artists to collaborate with like minds online, making the creative process fun.

As Avid Technology continues to provide solutions for artists and creative individuals, the company could experience more growth in the coming years.

Music Stocks: Understanding the Industry

The music industry has undergone a drastic transformation over the past 20 years. Consumers are shifting away from physical media, like CDs and MP3 players, towards subscription streaming models, like Spotify and Apple Music. This trend transformed the landscape of the music business by creating new power players in the market.

Previously, the music industry more or less consisted of artists and record labels. Record labels controlled the distribution and artists created the content. Now, the major streamers also control a large chunk of the distribution.

According to a consumer study from the International Federation of the Phonographic Industry, 89% of global consumers listen to streaming music. The average user listens to about 18 hours of music per week, and 54% say they “love” or are “fanatical” about music. Those are fantastic engagement statistics.

Music plays an important role in practically every culture. No matter where you go, people are listening to music. Streaming services make it convenient and affordable for listeners to hear whatever music suits their mood, so it’s no surprise that they have become so popular. As high-speed internet spreads further and further into emerging markets, the music industry is likely to continue growing at a brisk pace.

music stocks - market share

Global Growth of Music Streaming Services

The global online music streaming service has experienced massive growth over the past few years. However, the next five years could see it record even more significant gains. In a new study by ResearchAndMarkets.com, the global online music streaming market could grow by $56.7 billion by over the next five years to reach $65.4 billion by 2025.

The US market is the largest, with 30.8% of the addressable market share. However, Europe and Asia will grow significantly in the coming years.

Music Stocks: Closing Thoughts

Music stocks had a great run over the past few years, and technology innovation played a big role in the expansion. Streaming platforms allow artists to connect with more fans and get compensated in the process. It’s a win-win for practically everyone involved. Plus, this industry more staying power than almost any other. Humans have been listening to music since before the dawn of time, so it’s safe to say this industry probably isn’t’ going anywhere anytime soon.

If you’re ready to rock out with music stocks, you should sign up for Stock Dork Alerts. We provide a steady stream of stock market news and analysis that will help keep you informed on everything happening in the world of Wall Street. Plus, our reports are written in plain English, so they’re easy to understand. After just a few weeks reading Dork Alerts, you’ll sound like the smartest guy at the water cooler. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

Hassan Maishera is a cryptocurrency expert and a Stock Dork freelance contibutor.

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