Tencent Music Posts Mixed Q3 Results

Online music and audio entertainment platform Tencent Music Entertainment Group (TME) has reported mixed results for the quarter ended September 30, 2021. Following the release, shares of the company appreciated 1% to close at $8.04 in Monday’s extended trade.

Revenue & Earnings

Tencent Music reported quarterly revenues of $1.21 billion, up 3% year-over-year. The figure, however, failed to surpass the consensus estimate of $1.23 billion. A year-over-year rise of 30.2% witnessed in revenues from music subscriptions to $295 million contributed to the overall growth in total revenues.

The company reported quarterly earnings of $0.09 per share, which surpassed the consensus estimate of $0.07 per share.

Other Operating Metrics

TME’s online music paying users witnessed a year-over-year jump of 37.7% to 71.2 million. The paying ratio also improved from 8% in the previous year to 11.2%.

Management Commentary

The Executive Chairman of Tencent Music, Cussion Pang, said, “In the third quarter, our online music services delivered healthy growth driven by strong momentum in subscriptions as users continue to be attracted by our enhanced music streaming experience. While the online music industry in China is adapting to regulatory changes and facing competition for time spent from short video services, we will continue to differentiate both our online music and social entertainment services and execute our dual engine content-and-platform strategy.”

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Price Target

Last month, Goldman Sachs analyst Piyush Mubayi reiterated a Hold rating on the stock. The analyst, however, lowered the price target from $8.65 to $8.

Overall, the Street has a Hold consensus rating based on 2 Buys, 6 Holds and 1 Sell. The average Tencent Music price target of $10.34 implies upside potential of 29.9% from current levels. Shares have declined about 47.4% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Tencent Music’s performance this quarter.

According to the tool, the Tencent Music website recorded a 46.58% monthly fall in global visits in September. Further, year-to-date, website traffic declined 15.36%.

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