Tencent Music Entertainment Hits Record 100 Million Music Subscribers in China
Tencent Music Entertainment (TME) is making significant strides in attracting more paying music subscribers in China. The company recently announced that its online music subscribers surpassed 100 million for the first time since TME listed in the U.S. in late 2018, during the July-to-September period.
This achievement is a significant milestone for TME, especially considering the size of China’s market. TME’s monthly active users currently stand at 594 million, surpassing Spotify’s claim of 574 million monthly active users across 184 countries and territories.
According to a recent report by Morgan Stanley analysts, TME’s music value is still undervalued, and they expect the company’s music revenue to double and profit to triple in the next three years. The analysts also noted that TME anticipates its music subscribers to grow by over 3 million each quarter, reaching an estimated 150 million in the medium term.
JPMorgan is also bullish about TME’s future, recently upgrading its recommendation to overweight from neutral and setting a new price target of $10 a share.
The online entertainment segment, particularly the music industry, is experiencing rapid growth in China, with revenue expected to increase by 140% between 2019 and 2023, according to estimates by Morgan Stanley. This growth outpaces other entertainment segments, including video games, which saw revenue grow by 30% over the same period.
Amid the industry’s growth, TME is repositioning itself by shifting away from its social entertainment business, such as livestreaming and karaoke, and focusing more on its online music segment. In the third quarter, TME’s revenue from social entertainment and other services fell by 49% to the equivalent of $276 million from the same period a year ago.
TME’s success in attracting music subscribers and its strategic shift to focus on the online music segment has drawn positive attention from analysts. With a strong outlook for future growth, TME’s stock could see a significant upside, offering potential gains for investors.
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