Tencent Music Shares Pop After Strong Q4 Results, Buyback; Retail Investors Extremely Bullish

Fourth quarter total revenue grew 8.2% year on year to 7.46 billion yuan ($1.02 billion), topping a 7.3-billion-yuan consensus estimate from FactSet.

U.S.-listed shares of Tencent Music Entertainment Group (TME) rose 15.5% to their highest level in nearly eight months on Tuesday after the company announced better-than-expected quarterly results and an up to $1 billion share buyback.

Fourth quarter total revenue grew 8.2% year on year to 7.46 billion yuan ($1.02 billion), topping a 7.3-billion-yuan consensus estimate from FactSet.

Earnings rose to 1.47 yuan per American depositary share from 1 yuan a year ago, and above estimates of 1.25 yuan.

Revenue from online music services - the company's larger unit - jumped 16% to 5.83 billion yuan, driven by gains in music subscription and advertising.

Sales from music subscriptions climbed 18% on the back of a 13% growth in paying users.

Q4 marks the second straight quarter of revenue growth for the Chinese company, after declines in each quarter from Q3 FY2023 through Q2 FY2024. 

Tencent Music also announced the fresh buyback on Tuesday, after completing a $500 million buyback plan announced in March 2023.

Social entertainment services and other revenue fell 13% to 1.63 billion yuan, while paying users for the business slipped 3.8% to 7.7 million.

The social business, which includes karaoke app WeSing and live concert platform Kuwo Music, has struggled recently due to Beijing's stricter rules on live streaming and online tipping, which limit monetization.

Monthly active users for the online music business decreased 3.5% to 556 million, while mobile MAUs for its social entertainment business dropped 21% to 82 million.

"Looking ahead to 2025, we aim to harness the power of (artificial intelligence) to personalize our services and bring more new experiences to users," CEO Ross Liang said in a statement.

On Stocktwits, retail sentiment held firmly in the 'extremely bearish' territory, with 'extremely high' message volume.

A user posted that the stock would be set to climb higher if it breaches the psychological level of $16.

Tencent Music shares trade at $15.09, up 34% year to date.

($1 = 7.23 yuan)

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