Tuesday, August 9, 2011

Dark Monday for Music and Entertainment Stocks

A number of investment bank stocks declined sharply Monday after S&P downgraded the U.S. late Friday, according to a story by Glenn Peoples at billboard.biz. The Dow Jones index dropped 5.55% to 10.809.85. The S&P 500 sank an ominous 6.66% to 1,119.46. The tech-heavy Nasdaq fell 6.9% to 2,357.69.

Music-related stocks of American-based companies suffered along with the markets. Live Nation closed down 6.29% at $8.79 after falling as far as $8.37. However, the company turned out to be a rare bright spot Monday after its strong second-quarter earnings released after trading ended. Second-quarter revenue increased 23.1% to $1.559 billion behind a 25.9% improvement in concert revenue. The news sent its stock up nearly 13% in after-hours trading and the stock got back its losses from the previous two trading days.

There was little to cheer about elsewhere. Pandora Media closed down 7.4% at $12.52 and is now 34% down from its July high of $20.45. Madison Square Garden closed down 5.89% at $23.62. Sirius XM fell 12.7% to $1.65, far from its 52-week low of $0.95 but also down considerably from its 52-week high of $2.44 set in May. Viacom dropped 8.75% to $41.00. Cumulus Media fell 11.86% to $2.60. Foreign-based parent companies of two major music groups fared a bit better. Vivendi (parent of Universal Music Group) dropped a mere 1.97% to $15.18. Sony Corp. (parent of Sony Music Entertainment) dropped 6.35% to $21.67.

Monday's fall occurred as executives at many investment banks downplayed the importance of S&P's downgrade, according to The Street.

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