Tencent Music Entertainment shares slump on drop in karaoke platform users

By Louis Goss

Tencent Music Entertainment Group's New York listed shares slumped in Tuesday's pre-market session as the Chinese streaming giant said a sharp drop in the number of people using its karaoke platforms had driven a slump in its second quarter revenue.

The Shenzhen-headquartered company posted a 1.7% drop in its revenue -Yen7.16 billion ($998.9 million), as it saw its overall user numbers fall 2.58% year-on-year, driven by a sharp 45.8% drop in people using its 'social entertainment' platforms including WeSing.

Tencent Music Entertainment Group (TME) shares listed on the New York Stock Exchange fell 7% in Tuesday's pre-market session, having previously advanced by 46% in the year-to-date.

The company's Hong Kong listed shares (HK:1698) were up 5% in Tuesday's session prior to publication of Tencent Music Entertainment's results having increased 57% in 2024 so far.

The Chinese streaming giant, which controls around 60% of China's music streaming market, nonetheless, posted a 33.1% increase in its second-quarter net profit, to -Yen1.79 billion, driven by the addition of 10 million extra subscribers to its music platforms in the first half of 2024.

This 17.7% annual growth in the number of paid subscribers using Tencent Music Entertainment's music streaming platforms, to 117 million paid users, saw revenues from the segment increase 27.7% year-on-year, to -Yen5.42 billion.

The increase in paid subscribers was, however, offset by a sharp 42.8% drop in revenue from the company's social entertainment business, to -Yen1.74 billion, which the company blamed on the introduction of stricter compliance producers and competition from rival platforms.

Tencent Music Entertainment Group was first formed in 2016 through the merger of Tencent's music streaming subsidiaries ahead of an initial public offering on the New York Stock Exchange in December 2018.

The Chinese giant, which also listed its shares on the Hong Kong Stock Exchange in 2022, is now the second largest music streaming company in the world in terms of paid subscribers, behind Spotify, which has around 246 million paid users worldwide.

Alongside its music streaming subsidiaries QQ Music, Kugou Music, and Kuwo Music, Tencent Music Entertainment also owns karaoke app WeSing which lets users record singing videos and host karaoke competitions.

-Louis Goss

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08-13-24 0712ET

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