Pershing Square Capital Management, L.P. on Universal Music Group
Thesis
UMG is a high-quality, capital-light royalty on growing music consumption, currently trading at a record low valuation of 18x earnings. Growth is set to accelerate from 'Streaming 2.0' deals and new partnerships, while AI can be a tailwind to growth and efficiency. Given its market position and sustained growth runway, we believe the current valuation represents a substantial discount to its intrinsic value.
“UMG is a high-quality, capital-light, rapidly growing royalty on greater music consumption. AI can be a further tailwind to growth... UMG trades at a record low valuation... Given its market position and decades-long runway for sustained earnings growth, we believe UMG’s current valuation represents a very substantial discount to its intrinsic value.”