Warner Music Group Corp. (WMG) shares plummeted by 5.08% in the pre-market trading session on Thursday, following the company's disappointing fiscal first-quarter results. Despite beating earnings estimates, WMG's revenue declined by 4.7% year-over-year, suggesting potential concerns about the company's growth prospects.
The key factors contributing to WMG's stock plummet were the weak revenue performance and the impact of discontinued distribution deals. Specifically, the company's recorded music revenue fell by 7% to $1.35 billion, partly due to the discontinuation of a distribution deal with longtime partner BMG. This deal termination weighed heavily on WMG's top-line performance.
Furthermore, while WMG announced strategic deals with Spotify for direct licensing and the acquisition of a controlling stake in Tempo Music to expand its intellectual property portfolio, these initiatives failed to alleviate investors' concerns over the company's near-term growth prospects.
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