Focus Area
However, it will be offset by contributions from the company’s content partnerships with the other units under the media segment of parent Tencent Holdings, including the gaming and video divisions. Also, the management’s efforts to enhance customer experience by revamping the platform bodes well for the company – such as the recent launch of updated QQ Music app.
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With around 31 million paying users and stable revenue-per-user, amid steady subscriber growth, the company promises long-term shareholder value. Moreover, the management is planning to gradually push more content behind the paywall in the future, strengthening revenues.
Q2 Performance
In the second quarter, the tech firm added around 2.6 million paid users even as revenues increased in double digits to $859 million, aided by music services and social entertainment offerings. Adjusted earnings rose to $0.8 per ADS and topped the Street view.
Last month, UBS Group raised its rating on Tencent Music’s stock from hold to buy. The current price target of $16 represents a 19% upside from the last closing price. The majority of the analysts following Tencent recommend strong buy, taking a cue from the positive outlook and affordable price.
Spotify Earnings
Fellow music streamer Spotify Technology (SPOT) last month said its earnings rose in the third quarter, aided by a 28% revenue growth, and surpassed the market’s expectations. It also announced the retirement of CFO Barry McCarthy early next year.
Tencent Music’s stock has witnessed volatility ever since the company went public last year. This week, the shares traded slightly above the levels seen at the beginning of the year. In the last six months, they lost about 16%.