The digital content creation industry is soaring to new heights. Thanks to the explosion of internet usage across the globe, technological innovations, and the increasing appetite of adults for consuming content digitally, the landscape has transformed dramatically. This surge shows no sign of slowing down.
Amid this backdrop, investors could scoop up shares of fundamentally stable digital content creator stocks, Spotify Technology S.A. (SPOT), Tencent Music Entertainment Group (TME), and Gannett Co., Inc. (GCI). These companies are poised to benefit from the continuous rise of digital content consumption.
Digital content creation is taking the world by storm, capturing attention in ways we have never seen before. The rise of videos, images, and interactive formats is undeniably magnetic. People are glued to their screens, unable to resist the allure of fresh, dynamic media that speaks volumes without words.
But the real game-changer? The internet. This is where the magic happens. According to Dataportal, a staggering 5.52 billion people were using the internet at the start of October 2024. That’s an overwhelming 67.5% of the world’s population now connected, a figure that is only expected to rise.
This global web connection has made digital content consumption the norm. In fact, over 54% of U.S. adults now turn to social media for news, as highlighted by Pew Research. This shift is a clear sign of how content is now consumed—on the go, across platforms, and often within the palm of our hands.
With no sign of slowing down, the digital content creation market is on track for explosive growth. Verified Market Research predicts it will reach an eye-popping $181.4 billion by 2030. The market is set to expand at a CAGR of 25.7%, making this an exciting space to watch.
Now let us dive deep into the fundamentals of three digital content creator stocks, starting with #3.
Stock #3: Spotify Technology S.A. (SPOT)
Headquartered in Luxembourg City, Luxembourg, SPOT provides audio streaming subscription services. The company has two segments: Premium and Ad-Supported. It also offers sales, distribution and marketing, contract research and development, and customer and other support services.
On November 26, SPOT announced the launch of Spotify for Authors, a platform designed to provide authors and publishers with better tools and data to maximize their success on SPOT.
With this launch, SPOT is expected to strengthen its position in the audiobook market, contributing to its overall expansion and enhancing its growth prospects.
On November 6, SPOT announced a partnership with Emirates to include SPOT’s curated playlists and podcasts to Emirates’ award-winning ice system. The partnership expands the company’s global reach and content offerings and facilitates SPOT’s growth prospects and global expansion.
For the fiscal third quarter that ended September 30, 2024, SPOT’s revenue increased 18.8% year-over-year to €3.99 billion ($4.22 billion). Its gross profit rose 40.1% from the year-ago value to €1.24 billion ($1.31 billion). Moreover, the company’s operating income increased significantly year-over-year to €454 million ($479.93 million).
In addition, net income and EPS attributable to owners of the parent rose 361.5% and 339.4% from the prior year’s quarter to €300 million ($317.14 million) and €1.45.
Analysts expect SPOT’s revenue and EPS for the fiscal year ending December 2025 to rise 14.8% and 56.8% from the prior year to reach $18.73 billion and $9.56, respectively.
Shares of SPOT have surged 53.5% over the past six months and 150.2% over the past year, closing the last trading session at $498.63.
SPOT’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
SPOT has an A grade for Growth and a B for Quality. Within the Entertainment – Radio industry, SPOT is ranked #2 out of 4 stocks.
Beyond what is stated above, we have also given SPOT grades for Momentum, Value, Sentiment, and Stability. Get all SPOT ratings here.
Stock #2: Tencent Music Entertainment Group (TME)
Based in Shenzhen, China, TME provides music streaming, online karaoke, and live streaming services through its online music entertainment platforms. The company’s other offerings inlcude QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live.
Earlier this year, TME announced the renewal of a multi-year strategic licensing agreement with Universal Music Group (UMG), a music-based entertainment company. Through this partnership, TME has gained access to UMG's music catalog for its platforms, expanding its offerings and driving user growth.
For the fiscal 2024 third quarter that ended September 30, TME’s revenues increased 6.8% year-over-year to $1 billion. Its gross profit rose 27.7% from the year-ago value to $426 million. Moreover, the company’s operating profit grew 50.5% from the prior year’s quarter to $306 million.
Additionally, TME’s non-IRFS net profit and EPS for Class A and Class B ordinary shares increased 29.1% and 31.8% year-over-year to $276 million and $0.08, respectively.
Street expects TME’s revenue and EPS for the fiscal fourth quarter ending December 2024 to increase 4.9% and 28.2% year-over-year to $1.00 billion and $0.18, respectively. In addition, the company topped the consensus revenue estimates in all four trailing quarters.
TME’s shares surged 32.7% over the past nine months and 54.9% over the past year to close the last trading session at $12.55.
TME’s POWR Ratings mirror its fundamentals. Within the Entertainment - Media Producers industry, TME is ranked #6 out of 13 stocks.
Click here to access TME’s ratings for Quality, Value, Momentum, Growth, Sentiment, and Stability.
Stock #1: Gannett Co., Inc. (GCI)
GCI is a media and marketing solutions company that operates through three segments: Domestic Gannett Media; Newsquest; and Digital Marketing Solutions. The company offers digital-only subscription, community events platform, magazines, sports, and games etc.
On December 5, GCI’s USA TODAY announced the release of its USA TODAY Movie Meter, a platform that engages movie enthusiasts to rate which film deserves the “Film of the Year” designation. By driving user growth through its new offerings, GCI is expected to strengthen its position and enhance its growth prospects.
On September 16, GCI announced a multi-year strategic partnership with BetMGM, a sports betting and iGaming operator. Through this agreement, BetMGM will serve as the preferred online sportsbook and casino partner for USA TODAY Sports, providing sports betting odds and betting information.
With the rise of sports betting, the partnership is set to bring in new users to GCI’s platform while also expanding its offerings and bringing in new income streams.
For the fiscal 2024 third quarter that ended September 30, GCI’s total revenues came in at $612.44 million. Its adjusted EBITDA increased 5.6% year-over-year to $62.88 million. As of September 30, 2024, GCI’s cash and cash equivalents stood at $101.80 million, compared to $100.18 million on December 31, 2023.
For the fiscal year ending December 2025, analysts expect GCI’s revenue to come in at $2.51 billion.
Shares of GCI have surged 25.1% over the past six months and 181.4% over the past year to close the last trading session at $5.29.
GCI’s prospects are reflected in its POWR Ratings. The stock has a B grade for Growth and Value.
Within the B-rated Entertainment - Publishing industry, GCI is ranked #5 out of 7 stocks. Click here to access its Momentum, Quality, Sentiment, and Stability ratings.
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SPOT shares closed at $498.63 on Friday, up $5.12 (+1.04%). Year-to-date, SPOT has gained 165.36%, versus a 29.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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