State Champ Radio Tencent Music
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As some once high-flying streaming stocks limp toward the end of the year, music stocks have fallen far below their all-time high.
Tencent Music Entertainment (TME) dropped 11.0% to $18.93 after the company reported its third-quarter earnings on Tuesday (Nov. 11). TME reported strong growth in online music of 27.2% and music subscriptions of 17.2%. It’s not clear why investors reacted negatively, but it’s possible they have concerns that TME’s margins will suffer as offline (merchandise sales and performances) revenues grow faster than online revenues; as CFO Shirley Hu said during Tuesday’s earnings call, “offline performances and artist-related merchandise sales delivered triple-digit year-on-year revenue growth” in the quarter, adding that those offline revenues have a “lower gross margin.” Another factor was Nomura’s decision on Friday (Nov. 14) to lower its TME price target to $26 from $30 while maintaining its “buy” rating.
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Spotify was one of the week’s few winners, rising 3.1% to $635.81 and recapturing some of the previous week’s 5.9% decline. The stock reached as high as $668.49 on Thursday (Nov. 14) after news reports revealed the company unveiled a new Premium Platinum plan that will take the place of Premium Family in five markets, including India and South Africa.
Among streaming stocks, TME is up 66.2% year to date but has fallen 25.9% over the last 13 weeks. Spotify has gained 58.8% in 2025 but is $150 below its all-time high of $785 set in June. Similarly, Netease Cloud Music is up 64.8% year to date but has lost 30.8% in the last 9 weeks.
The 19-company Billboard Global Music Index (BGMI) fell 0.1% to 2,700.25, marking the eighth consecutive week the index has failed to post a gain; over those eight weeks, the index has dropped 12.9%. Only three of the index’s 19 stocks finished the week in positive territory, while two stocks were unchanged and 14 were in the red.
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StubHub, which is not included in the BGMI, dropped 23.5% to $14.87 after the company’s first quarterly earnings release as a public company on Thursday (Nov. 13). StubHub reported an 8% increase in revenue but declined to provide guidance for the fourth quarter, causing the stock price to fall 21.0% on Friday alone. After the precipitous decline, StubHub is now 36.7% below its $23.50 IPO price.
Warner Music Group (WMG) finished the week in positive territory, rising 0.4% to $30.36. WMG will report results for its fourth quarter and fiscal year on Thursday (Nov. 20).
HYBE dropped 2.6% to 297,500 KRW ($205.24). On Tuesday (Nov. 11), Nomura dropped its price target on HYBE to 354,000 KRW ($TK) from 370,000 KRW ($244.22) and kept its “buy” rating. The week could have been worse: HYBE shares rose 4.5% on Thursday (Nov. 13) on news that the members of girl group NewJeans will return to HYBE imprint ADOR after losing their legal battle to break away from the company. The stock jumped 18% in the week ended Oct. 31 after the court’s ruling.
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Universal Music Group fell 0.8% to 22.30 euros ($25.92). On Thursday, Sadif Investment Analytics trimmed its price target to 28.56 euros ($33.20) from 28.82 euros ($33.50) and lowered its rating to “hold” from “strong buy.”
On the radio front, Cumulus Media fell 28.8% to $0.0085, bringing its year-to-date decline to 88.9%. Cumulus reported earnings on Oct. 31 but could have been dragged down by iHeartMedia, which reported earnings on Monday (Nov. 10) and finished the week down 12.1% to $4.07.
Markets were mixed as investors contemplated an AI bubble and the likelihood of another rate cut by the U.S. Federal Reserve. In the U.S., the Nasdaq composite index fell 0.5% to 22,900.59 and the S&P 500 rose 0.1% to 6,743.11. In the U.K., the FTSE 100 gained 0.2% to 9,698.37. South Korea’s KOSPI composite index improved 1.5% to 4,011.57, bringing its year-to-date gain to 64.3%. China’s Shanghai Composite Index fell 0.2% to 3,990.49.
Tencent Music Entertainment Group’s (TME) quarterly net profit surged by more than 50% for the quarter ending in June on the strength of its online music business, sending its stock up 5% in mid-day trading on Wednesday.
Net profit for TME’s second quarter was RMB1.30 billion ($179 million), up 51.6% from second quarter last year, the Chinese company reported on Tuesday. Total revenues rose 5.5% to RMB7.29 billion ($1.01 billion) in the quarter ending June 30, as a more paying subscribers helped the online music business contribute more than half of TME’s earnings for the first time since the company’s launch in 2016.
TME is growing increasingly focused on its music business, and its company promotions which resulted in a record high of 99.4 million paying users this quarter, are paying off, executives say.
“As we continue driving the healthy development of China’s online music industry, we have seen users become increasingly accustomed and willing to pay for copyrighted music, whether for songs they want to listen to or for premium listening features they enjoy,” TME executive chairman Cussion Pang said on Tuesday. “This marks a significant step along TME’s growth trajectory.”
Quarterly revenue from online music services jumped nearly 50% to RMB4.25 billion (US$586 million) on strong music subscription revenue growth and advertising services and contributed more than 58% of the company’s total revenues.
The number of monthly active users for online music fell nearly 5% to 594 million in the second quarter this year from 623 million in the year-ago quarter, but the number of paying online music users rose more than 20% to 99.4 million from 82.7 million a year ago.
Revenues from music subscriptions grew 37% to RMB2.89 billion ($399 million).
TME’s social entertainment business, which it has de-emphasized for the last several quarters in a row, saw mobile monthly active users fall 18% to 136 million from 166 million, while paying social entertainment users also declined 5% to 7.5 from 7.9.
Monthly average revenue per paying user (ARPPU) rose 14% to RMB9.7 ($1.33) for online music, while monthly ARPPU for social entertainment declined 20% to RMB135 ($18.50).
Tencent Music executives said they are in the process of deploying several service enhancement and risk control measures that will promote music-centric live streaming, which they expect to put pressure on TME’s social entertainment services revenues throughout the rest of 2023.
“TME remains confident about delivering year-over-year net profit growth for 2023, driven by the continued strong performance of online music services, laying a much more solid foundation for the company’s healthy and resilient development in the long run,” a spokesperson said.
South Korea-based music and entertainment company HYBE signed a music distribution deal with Tencent Music Entertainment this week, according to media reports. Reuters, citing an article by the Seoul Economic Daily, reported Tuesday (May 23) that the agreement allows music by BTS, TOMORROW X TOGETHER and other HYBE artists to be streamed on Tencent Music’s platforms. […]
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