Tencent Music: A Tune I’m Not Quite Dancing To

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Right. So, Tencent Music Entertainment Group (TME 21.37%). Shares took a proper tumble today, didn’t they? Honestly, it’s always a bit alarming when a stock you’re vaguely considering—and let’s be clear, I was considering—decides to perform a swan dive. They reported earnings, which, on the surface, looked…fine. Solid even. But the devil, as always, is in the user numbers. Or, rather, the distinct lack of them.

As of this morning, the stock was down over 20%. Twenty percent! It’s enough to make you reconsider your entire life, isn’t it? And possibly switch to vinyl.

What happened with Tencent Music

Revenue was up 15.9% to $1.24 billion, which is…good. Adjusted earnings per share matched expectations at $0.23. Perfectly acceptable. Music subscriptions brought in $653 million, a 13% increase. And other music services—whatever those are—were up a rather impressive 41% to $363 million. All very…positive. Except for that nagging feeling that something’s off. Like a slightly out-of-tune piano.

And there it is. Monthly active users? Down 5% to 528 million. 5%! That’s…significant. Paying users are up, admittedly—5.3% to 127.4 million—but you can’t just keep squeezing more money out of the same dwindling pool of people, can you? It’s like trying to get blood from a stone. Or, in this case, a streaming service. Apparently, short-form video platforms like ByteDance’s Douyin (China’s TikTok) and Qishui Music are stealing their lunch. Which, frankly, seems a bit rude.

Management is trying to sound optimistic, talking about a growing super VIP user base (over 20 million!) and an increase in average revenue per paying user (up 7% to 11.9 RMB). They’ve launched an ad-supported subscription plan, which, let’s be honest, always feels like a bit of a desperate move. “Broaden user access,” they say. “Attract audiences.” It’s a nice thought. But I suspect it’s a plaster on a rather large wound.

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What’s next for Tencent Music

The Chinese don’t offer guidance, which is… frustrating. It leaves you staring into the abyss, wondering what on earth is going to happen next. They seem committed to chasing the high-end customer, which, as a strategy, isn’t terrible. But it feels…risky. Like building a luxury hotel on a sinking island.

Is the market splitting into a free tier—owned by the competition—and a paid tier owned by Tencent? Or are they simply losing market share? I honestly can’t tell. And that’s always a bad sign, isn’t it? The uncertainty. It’s enough to give you palpitations.

The 20% drawdown feels a bit extreme, admittedly. But I’m keeping a very close eye on that MAU decline. As a dividend hunter, I need stability. I need growth. And right now, Tencent Music is looking a little…wobbly. It’s not a complete no-go, mind you. But it’s definitely not a tune I’m quite dancing to… yet.

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2026-03-17 19:22