In 2017, when Tencent acquired a 7.5% stake in Spotify and the latter acquired a 9% stake in Tencent Music, the Chinese music company was valued at an estimated $12 billion. Tencent held about a 62% stake in Tencent Music at 2017-end.
The stock sale is expected to value Tencent Music at greater than $25 billion
Tencent Music was formed through a merger with China Music nearly two years ago and is currently the largest music streaming service in China. It also enjoys a strong competitive advantage in the country compared to Spotify and Apple Music as Spotify is yet to enter China while Apple Music is less popular in the Red Dragon country compared to Tencent Music.
Social media giant Tencent’s valuation stood at $580 billion in January. The company is also involved in gaming and making movies through its Tencent Games and Tencent Pictures businesses, with Tencent Gaming being the world’s biggest gaming firm in terms of market cap and revenue. The company’s online publishing business Tencent Literature made a stunning debut through its IPO in 2017 which saw its shares almost double in early trading.
Worldwide music revenues are said to have totaled $17.4 billion in 2017 with music streaming revenues amounting to $7.4 billion, reflecting a year-on-year increase of 39%. With the strong worldwide revenues forecasted in the music industry, the road ahead seems positive for Tencent Music.