• Universal Music Group (UMG) is an AI-adjacent music major whose stock fell sharply this year after a failed takeover bid and slower Q2 subscription growth, then rallied on deal rumors and a Q3 subscription beat.

• Short sellers kept building positions through the rally, lifting short interest to 6.1% of float and the squeeze score to a peak of 85, as the stock rose.

• With a crowded score of 55 and a squeeze score of 65, shorts are exposed if buyout interest returns or subscription growth holds.

• Universal Music Group is AI-adjacent. It has partnerships with NVIDIA and several other AI companies, including Splice, KLAY and Udio. UMG is using its intellectual property catalog to position itself as the gatekeeper of ethical, licensed AI music.

• Universal Music Group is one of the three largest global music companies, with businesses in recorded music, music publishing (songwriter copyrights, including licensing for film and advertising) and merchandising.

• Short interest rose from about 2.3% to 6.1% of float between late July and Nov 11, lifting the crowded score to 55. Short sellers kept building positions after the Q3 beat. The stock is still well below its earlier levels, so some shorts may be betting the October rally was a relief move rather than a rerating.

• The stock has rallied 22% from its Sep 11 low of €14.02 but is still down about 23% year to date. The higher crowded score and recent gains pushed the squeeze score to a peak of 85 on Nov 6; it has since eased to 65.

• Reasons for the Decline: UMG’s board rejected Pershing Square’s proposal of about $64 billion, and Pershing then exited its entire stake, sending the shares down as much as 7.6%.

• In Q2, subscription growth slowed to 6.7% from 7.9% the prior quarter, and on July 31 the shares fell as much as 25%, their largest one-day drop since listing.

• Pershing had argued that uncertainty over the Bolloré stake, the postponed US listing, an underused balance sheet and weak investor communications were weighing on the valuation. Shorts may expect any take-private premium to fade.

• Reasons for the Rally: Bloomberg reported on Oct 26 that UMG held preliminary take-private talks earlier in 2026 with firms including Apollo, TPG, and Blackstone. The talks did not advance, and no formal sale process has started.

• In Q3, subscription growth excluding Downtown reached 9.5%, well ahead of the 8.2% analysts expected, and the shares closed up 7.9% at €17.09 after rising as much as 14.9% intraday. More than a third of that growth came from pricing, and revenue grew only 5.3% excluding Downtown, so shorts may see the beat as less durable than it looks.

• The share of analysts with Sell ratings has risen from 5% to 18% as short interest has risen.

• Long active interest rose from about 9% to about 13.7% this year, with most of the gain in February and March and a steadier climb since late May.

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.