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Tencent Music Entertainment Group
(NYSE:TME)
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Rating:75Outperform
Price Target:
$10.00
▲(14.42% Upside)
Action:Reiterated
Date:08/18/26
The score is driven primarily by strong financial performance (expanded margins, resumed growth, solid cash generation) and favorable valuation (low P/E and solid dividend yield). The main offset is weaker technical positioning (price well below the 200-day average and soft momentum), while the earnings call adds moderate support due to continued growth, strong liquidity, and buybacks tempered by near-term margin and advertising pressures.
Positive Factors
Music and Membership Growth
Strong growth in core music services and memberships supports a larger recurring-revenue base. SVIP adoption and broader member benefits can improve retention, deepen monetization and reduce reliance on more volatile social-entertainment spending.
Negative Factors
Margin Normalization and Cost Pressure
Higher content, channel, integration and operating costs could limit the conversion of revenue growth into earnings. Margin normalization from elevated prior levels suggests profitability may remain strong but will require disciplined spending and favorable mix.
Read all positive and negative factors
Positive Factors
Negative Factors
Music and Membership Growth
Strong growth in core music services and memberships supports a larger recurring-revenue base. SVIP adoption and broader member benefits can improve retention, deepen monetization and reduce reliance on more volatile social-entertainment spending.
Read all positive factors
Tencent Music Entertainment Group (TME) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.63B
Dividend Yield2.93%
Average Volume (3M)10.52M
Price to Earnings (P/E)9.8
Beta (1Y)1.02
Revenue Growth15.72%
EPS Growth-7.23%
CountryUS
Employees5,690
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)5.56
Shares Outstanding818,327,500
10 Day Avg. Volume11,594,474
30 Day Avg. Volume10,524,107
Financial Highlights & Ratios
PEG Ratio0.28
Price to Book (P/B)2.34
Price to Sales (P/S)5.71
P/FCF Ratio19.06
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$12.89Price Target Upside47.43% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)5.86
Revenue Forecast (FY)$35.33B
Tencent Music Entertainment Group Business Overview & Revenue Model
Company Description
Tencent Music Entertainment Group (TME) is a premier operator of online music entertainment platforms across the People's Republic of China, offering a range of services including music streaming, digital karaoke, and live interactive broadcasting...
How the Company Makes Money
TME primarily makes money from two broad revenue streams: (1) online music services and (2) social entertainment services.
1) Online music services (subscription and related music monetization)
- Music subscriptions: TME earns recurring revenue f...
Tencent Music Entertainment Group Earnings Call Summary
Earnings Call Date:Aug 11, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 17, 2026
Earnings Call Sentiment Positive
The call presents a generally constructive operating picture: top-line growth (6% YoY) was supported by strong music-related services (+11% YoY), SVIP/membership expansion (+8% YoY), improving EBITDA (+5% YoY), solid cash reserves and active share repurchases. Strategic moves—Ximalaya consolidation, deeper Tencent ecosystem integration, IP monetization (live events, merchandise) and AI/product enhancements—are highlighted as drivers of future growth. Offsetting these positives are advertising headwinds, modest gross margin compression, rising operating expenses and near-term subscription moderation amid competition. Overall, the positives (revenue and membership growth, profitability gains, strong IP momentum and ample cash/share buybacks) outweigh the near-term margin and ad challenges, yielding a favorable outlook but with noted execution and integration costs to monitor.Positive Updates
Quarterly Revenue Growth
Total revenue of RMB 8.9 billion in Q2 2026, up 6% year‑over‑year; consolidation contribution of approximately RMB 0.4 billion to revenue.
Negative Updates
Advertising Business Headwinds
Advertising (ad-supported) business faced headwinds in a challenging macro and competitive environment, weighing on advertising revenue growth despite Ximalaya consolidation benefits.
Read all updates
Q2-2026 Updates
Positive
Negative
Quarterly Revenue Growth
Total revenue of RMB 8.9 billion in Q2 2026, up 6% year‑over‑year; consolidation contribution of approximately RMB 0.4 billion to revenue.
Read all positive updates
Company Guidance
Management guided that it will prioritize SVIP membership expansion, IP and content investment and deeper Tencent-ecosystem integration while dynamically managing channel spend; key Q2 metrics cited were total revenue RMB 8.9 billion (+6% YoY) with music-related services +11% YoY and membership revenue RMB 4.8 billion (+8% YoY), consolidation contributing ~RMB 0.4 billion, gross margin 44.2% (44.4% a year ago), operating expenses RMB 1.3 billion (14.5% of revenue vs 13.7% a year ago), adjusted EBITDA RMB 3.3 billion (+5% YoY), IFRS net profit RMB 2.7 billion (+4% YoY), net profit attributable RMB 2.5 billion (vs RMB 2.4 billion), diluted EPS per ADS ~RMB 1.7, cash/short-term investments RMB 44.2 billion (vs RMB 41.0 billion on Mar 31), and Q2 share repurchases of 43.5 million ADS for USD 400 million; near-term financial guidance was for a slight year‑over‑year decline in gross margin, sales and operating expenses to rise modestly, net margin to dip slightly while EBITDA should edge up, and management reiterated on‑track completion of the 2025 buyback and potential further repurchases.Tencent Music Entertainment Group Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
80
Positive
Cash Flow
78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 32.99B | 32.90B | 28.40B | 27.75B | 28.34B | 31.24B |
| Gross Profit | 18.72B | 14.54B | 12.03B | 9.79B | 8.77B | 9.40B |
| EBITDA | 14.85B | 14.77B | 9.81B | 5.72B | 5.65B | 4.75B |
| Net Income | 8.60B | 11.06B | 6.64B | 4.92B | 3.68B | 3.03B |
Balance Sheet | ||||||
| Total Assets | 116.95B | 102.59B | 90.44B | 75.54B | 67.01B | 67.25B |
| Cash, Cash Equivalents and Short-Term Investments | 30.65B | 24.35B | 27.21B | 23.54B | 20.88B | 20.43B |
| Total Debt | 16.88B | 3.82B | 6.05B | 6.05B | 5.96B | 5.36B |
| Total Liabilities | 35.87B | 19.48B | 20.72B | 18.33B | 17.88B | 16.20B |
| Stockholders Equity | 78.27B | 80.34B | 67.86B | 55.91B | 48.10B | 50.32B |
Cash Flow | ||||||
| Free Cash Flow | 8.88B | 9.86B | 9.24B | 6.17B | 6.43B | 2.48B |
| Operating Cash Flow | 11.22B | 10.16B | 10.28B | 7.34B | 7.48B | 5.24B |
| Investing Cash Flow | -3.30B | -10.27B | -6.82B | -1.86B | -1.45B | -6.00B |
| Financing Cash Flow | 5.13B | -4.41B | -3.83B | -1.54B | -3.42B | -3.71B |
Tencent Music Entertainment Group Risk Analysis
Tencent Music Entertainment Group disclosed 101 risk factors in its most recent earnings report. Tencent Music Entertainment Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
The AI industry faces changing and extensive regulations. Integrating AI into our offerings could lead to potential infringement claims and higher costs for regulatory compliance. Q4, 2023
Tencent Music Entertainment Group Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $115.16B | 28.91 | 40.52% | ― | 16.91% | 346.36% | |
75 Outperform | $12.63B | 9.75 | 11.23% | 2.71% | 15.72% | -7.23% | |
75 Outperform | $3.65B | 17.45 | 3.35% | 6.49% | 7.52% | ― | |
67 Neutral | $6.50B | 28.11 | 9.84% | ― | 10.34% | 620.66% | |
64 Neutral | $810.39M | 7.50 | 6.72% | ― | -1.21% | -41.09% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
49 Neutral | $129.77M | -27.66 | -1.63% | ― | -11.02% | 82.53% |
* Communication Services Sector Average
TME
Tencent Music Entertainment Group
8.26
-15.61
-65.39%
JOYY
JOYY
75.00
17.00
29.31%
MOMO
Hello Group
5.37
-2.79
-34.19%
BILI
Bilibili
15.23
-7.18
-32.04%
SPOT
Spotify
542.43
-164.76
-23.30%
DOYU
DouYu International Holdings
4.30
-3.45
-44.52%
Tencent Music Entertainment Group Corporate Events
Tencent Music Entertainment Delivers Q2 2026 Growth and Deepens Audio Ecosystem
Aug 11, 2026
Tencent Music Entertainment Group, China’s dominant online music and audio platform, reported unaudited results for the quarter ended June 30, 2026, highlighting steady growth in music-related services and membership revenue. The business no...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.