Tencent Music Entertainment Group (NYSE:TME) Sees Upgrade Amid Mixed Financial Performance

• Deutsche Bank upgraded Tencent Music Entertainment Group (NYSE:TME) to a "Buy" rating with a stock price of approximately $14.42.
• The company reported an 18% year-over-year increase in music subscription revenue, driven by a rise in paying users and ARPU.
• Challenges in the social entertainment segment led to a 13% decline in revenue, impacting the overall valuation and suggesting a potential 10% downside.

Tencent Music Entertainment Group, listed on the NYSE under the symbol TME, is a leading online music entertainment platform in China. The company offers a variety of services, including music streaming, online karaoke, and live streaming. Tencent Music competes with other major players in the digital music space, such as NetEase Cloud Music and global giants like Spotify.

On March 26, 2025, Deutsche Bank upgraded Tencent Music to a "Buy" rating, with the stock priced at approximately $14.42. This upgrade comes amid a backdrop of mixed financial performance. The company's fourth-quarter results for 2024 show strong growth in its online music services, with music subscription revenue increasing by 18% year-over-year. This growth is driven by a rise in paying users and an increase in average revenue per user (ARPU).

Despite the positive performance in music subscriptions, Tencent Music faces challenges in its social entertainment segment. The social entertainment revenue declined by 13% compared to the previous year. This decline has led to a cautious stock outlook, with analysts focusing on the music subscription segment for valuation. The limited value attributed to the social entertainment sector suggests a potential 10% downside, which could bring the stock price to around $13 per share.

Currently, TME's stock is priced at $14.42, reflecting a 1.19% increase or $0.17. Throughout the day, the stock has fluctuated between a low of $14.29 and a high of $14.64. Over the past year, TME has experienced a high of $15.77 and a low of $9.41. The company has a market capitalization of approximately $12.18 billion, with a trading volume of 2,185,823 shares on the NYSE today.