On March 18, Tencent Music Entertainment Group (NYSE: TME; HKEX: 01698.HK) experienced a significant decline in its stock prices on both the U.S. and Hong Kong stock markets simultaneously.
In the Eastern time zone on March 17, Tencent Music’s U.S. stock plummeted by 24.65% in a single day, closing at $11.37, hitting a nearly 52-week low with a trading volume of $781 million and a total market value shrinking to $17.611 billion.
After the Hong Kong stock market opened on March 18, Tencent Music’s stock also fell in sync, with an initial drop of over 15% in the morning, followed by a rapid expansion to around 23%.
On the news front, Tencent Music released its financial performance for the three months ending December 31, 2025. The group achieved a total revenue of 8.64 billion yuan, a year-on-year increase of 15.9%; online music service revenue reached 7.1 billion yuan, up 21.7% year-on-year; the net profit attributable to equity holders of the company was 2.2 billion yuan, a 12.6% increase year-on-year; and diluted earnings per American depositary share were $1.41.
However, compared to market expectations, this performance was considered mediocre, especially as user growth demonstrated signs of slowing down. In the fourth quarter, the monthly active users (MAU) of online music stood at 528 million, a 5% decrease compared to the same period last year. This marked a significant contraction since the company went public and the largest year-on-year decline in monthly active users in a quarter.
Meanwhile, the growth rate of paying users also showed signs of slowing down, with the number of paying users in the fourth quarter reaching 127.4 million, representing a year-on-year growth rate of only 5.3%, hitting a historical low.
According to the financial media outlet “Yan Finance,” following Tencent Music’s financial report release, several mainstream securities firms issued research reports, adjusting their ratings and target prices for Tencent Music. Among them, the latest report from JPMorgan Chase downgraded Tencent Music’s rating from “Overweight” to “Neutral” and significantly lowered target prices: the U.S. target price was slashed from $30 to $12, while the Hong Kong target price dropped from HK$120 to HK$48.
JPMorgan Chase believes that the downgrade this time is not due to a substantial deterioration in TME’s business, but a shift in its investment logic from “clear subscription compounding” to “ambiguous diversified engine.” The market needs time to recalibrate the valuation, hence the neutral rating in the short term.
During the earnings conference, Tencent Music announced that it would cease disclosing core user indicators such as MAU and paying user numbers from the first quarter of 2026.