Tencent Music Entertainment Group ADR

TME: XNYS (USA)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	$35.30	Bzdvds	Tkwqfscz

Tencent Music Earnings: Management Lifts 2024 Outlook, Announces New Pricing Strategy

Ivan Su

Aug 14, 2024

Narrow-moat Tencent Music’s second-quarter earnings mildly exceeded our expectations, but shares plummeted by more than 15% during US hours due to concerns over the company's emphasis on driving growth through higher subscription prices, potentially diminishing the contribution of subscriber growth to overall revenue. We believe the market is overreacting to this strategy shift. We fine-tuned our near-term forecasts, but the impact is immaterial to our fair value estimate of USD 17.20 per share. With its shares trading at around USD 11, we continue to view the firm as undervalued.

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