Hipgnosis Stock Has Fallen By About 32% During 2022 — What Does 2023 Have In Store?

Hipgnosis songs fund
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Hipgnosis songs fund
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Photo Credit: Hipgnosis Songs Fund

Hipgnosis stock (SONG on the London Stock Exchange) has suffered an approximately 32 percent valuation falloff since 2022’s beginning. But the high-profile entity’s market cap remains above £1 billion, and financial professionals are now discussing SONG’s path forward during 2023.

When the market closed on Friday, Hipgnosis stock was worth about £0.86 per share, having started 2022 at around £1.26. As mentioned, the slip represents a roughly 31.51 percent decline from the top of the year, which has of course proven tumultuous for stocks in the US as well as the UK.

To be sure, the value of the UK’s FTSE 250 index (which includes Hipgnosis) fell by 19.7 percent across 2022, according to the Guardian. (The same source communicated that the FTSE 100 had actually grown by about one percent during the 12-month stretch.)

Beyond these market-wide trends and the well-documented impact that rising rates are having on the Merck Mercuriadis-led IP investor’s business model, the operation’s debt has long been maxed out at $600 million or so. This hang-up has stopped the company – but not its Blackstone-powered “investment adviser,” Hipgnosis Song Management – from scooping up additional music IP.

Meanwhile, HSF’s sagging share price, which is especially significant because the company has attached a $2.22 billion net-asset valuation to its holdings, has prevented the issuance of new shares.

Though Hipgnosis’ stock-buyback plan looks to be bringing about share-price growth, it bears mentioning that some financial professionals previously highlighted the possibility of a third party swooping in and aggressively buying into SONG.

More broadly, different financial professionals are continuing to tout the perceived long-term potential of Hipgnosis stock, with J.P. Morgan having indicated in September that it was “optimistic about” the business’s “revenue over the coming year.”

J.P. Morgan specifically pointed to the impact of increased royalty rates and anticipated streaming service price hikes when explaining its position. For reference, HSF during the six months ending on September 30th posted $91.7 million in gross revenue (up about eight percent year over year) and $78.4 million in net revenue (up about six percent year over year).

October saw Hipgnosis Songs Fund refinance its debt, and certain investors expressed generally positive assessments of SONG thereafter. Furthermore, capital is continuing to pour into the overarching song-rights space despite the billions that companies have already invested in music IP throughout the past three years. Hipgnosis Song Management and Hipgnosis Songs Capital are reportedly in advanced talks to scoop up Justin Bieber’s catalog as part of a $200 million transaction.