Tencent Music’s revenue is higher than expected. The reason stock prices are dropping.

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Tencent Music is the music streaming division of Chinese tech giant Tencent.

Michael Nagle / Bloomberg

Chinese tech giant’s music streaming division


We had mixed results for the second quarter on Tuesday, including above consensus earnings.

Tencent Musical Entertainment Group,

It faces regulatory hurdles as part of the wider crackdown on China’s tech sector, losing more than 13% in New York City. Outperformed the decline seen in US-listed shares of Chinese group Big Tech.

Ali Baba,


Tencent fell about 3% to 5%.

History inside. Tencent’s music streaming division released in 2018


Through mutual ownership – Spotify owns around 9% of Tencent Music. Most Tencent Music users listen for free, unlike their Swedish peers, who rely on a subscriber base that pays for premium services. Tencent also offers a wide range of products, including four very popular Chinese mobile music apps, including a cost-effective karaoke app.

Tencent Music It’s going well every quarter, With recent regulatory crackdowns, stocks are under pressure on China’s wider tech sector. Since one month, Strict government oversight In areas such as technology, education, healthcare and real estate Significant drop in Chinese equitiesIncludes companies publicly traded in the United States such as Tencent Music. In particular, the main headwinds facing music groups include a July decision. Prohibit the parent company from owning exclusive music– –License agreement With global label.

Tencent Music’s share price has fallen more than 60% so far in 2021.

Read again: China is strengthening its grip in the tech sector with new rules. These stocks are down.

what’s new. The music streaming group mixed up in the second quarter of 2021 on Tuesday with strong results, with total sales of 8.01 billion RMB ($ 1.23 billion) and 8.1 billion RMB, which is a Wall Street estimate. Is slightly below. The earnings per share were 240,000 RMB, lower than the expected 560,000 RMB, but overall, the net profit of 871 million RMB exceeded the estimate of 864 million RMB.

Online music service revenue grew nearly 33% year-on-year, with music subscription revenue increasing over 36% to RMB 1.79 billion. Tencent Music reached 66.2 million paid online music users, recording annual growth of nearly 41%.

Fusion Pang, Executive Chairman of Tencent Music, said:

“Although this decision is expected to have some impact on business operations, we will continue to promote innovation, fulfill our social responsibilities, provide better service to our users and promote the long-term and healthy development of digital. We stick to our goals, the music industry, ”added Pan.

more: Tencent Music is under close scrutiny by Chinese regulators. What investors need to know.

Future prospects. Tencent Music’s results were good, but the timing was wrong. As regulator of the Chinese market, another sale hit the Chinese tech sector on Tuesday Issuance of draft rules for strengthening management About competition and the processing of user data. Tencent Music’s participation, still shaken by copyright decisions affecting operations, was overwhelmed by additional pressure.

Citi analysts expect the group’s shares to remain “unexpectedly in a range” due to a number of negative outlook factors, including regulatory requirements. However, investment banks give the stocks a buy rating at a target price of $ 12. Trading for around $ 8 today could be a buying opportunity. However, the regulatory situation in China remains uncertain, so investors should be careful.

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Tencent Music’s revenue is higher than expected. The reason stock prices are dropping.

Tencent Music’s revenue is higher than expected. The reason stock prices are dropping.

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