Warner Music IPO fails targets
by Brian Turner
Shares in Warner Music Group fell by 7 percent Wednesday morning as the company entered the market with its Initial Public Offering, signaling a lack of investor faith in a volatile industry.
Warner had hoped to raise over $750 million on shares in an announced price range of $22 to $24 per share. Instead, it raised $554.2 million by selling 32.6 million shares at a price of $17 per share.
By early Wednesday trading in New York, shares had fallen $1.25 to $15.75.
Warner executives are blaming recent weaknesses in the IPO market generally and a sell-off of media shares on Tuesday after a negative first-quarter report from DreamWorks for the retreat.
Some analysts had, however, predicted last week that Warner would have to drop the price of its shares below $20 per share.
Among the factors that may be making investors hesitant to buy Warner’s shares are general problems in the music business, ranging from digital piracy to the proliferation of new music outlets such as the Internet to other technological changes that impact on the music industry.
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