Why Tencent Music Entertainment Plunged Almost 30% This Week

By Billy Duberstein – Mar 20, 2026 at 3:29PM ESTKey PointsTencent Music reported fourth quarter earnings that beat on revenues but only met profit expectations. Management also said it would no longer disclose certain operating metrics going forward. The massive selloff could be an overreaction, as the stock now looks quite cheap. Shares of Tencent Music Entertainment (TME 1.60%) fell 28.8% this week through 3:30 p.m. Friday, according to data from S&P Global Market Intelligence. Tencent Music is sometimes regarded as the "Spotify (SPOT 1.65%) of China," since it's the leading streaming music subscription service in the country. However, Tencent Music's business is a bit different, as it also generates revenue from social music interactions, such as karaoke tipping and other interactive services. This week, Tencent Music held its fourth-quarter earnings. While the headline numbers themselves weren't bad, some concerns emerged over certain KPIs (key performance indicators). Management also said it would no longer disclose certain KPIs going forward, fueling more investor skepticism. ExpandNYSE: TMETencent Music Entertainment GroupToday's Change(-1.60%) $-0.17Current Price$10.13Key Data PointsMarket Cap$5.9BDay's Range$10.03 - $10.3852wk Range$9.86 - $26.70Volume705KAvg Vol7.7MGross Margin48.77%Dividend Yield1.75% Subscriber deceleration overshadows a revenue beat In the fourth quarter, Tencent Music grew revenue 15.9% to $1.24 billion, which beat expectations, while adjusted (non-GAAP) earnings per American Depositary Share (ADS) were up a lower 8.8%, just meeting expectations. Whenever a company grows profits at a lower rate than revenues, it could suggest that it's feeling competitive pressure. Moreover, investors appeared concerned about the slowdown in the subscription business, which grew just 13.2%, down from roughly 17% in the prior quarter. In general, investors like to see more revenue from subscriptions, which are perceived as "recurring" and higher quality, rather than advertising or other services that may be cyclical or more fleeting. Adding to the anxiety was Tencent Music saying that it would no longer disclose quarterly online music monthly active users (MAUs), the number of paying users, or average revenue per user (ARPU). Instead, Tencent Music will only disclose total paying users at the end of each year. As justification, management wrote: ... our business model has significantly evolved in recent years. As advertising and other IP-related offerings scale, and as we offer multi-tiered membership for online music subscriptions, the business impact of each paid membership varies. As a result, we are increasingly focused on revenue and profit as our primary performance indicators. Investors never tend to like it when management discloses less about a business, so it's no surprise the stock sold off. Image source: Getty Images. Has TME gotten too cheap? After the sell-off, Tencent Music's stock trades at just 11.5 times trailing adjusted earnings per ADS. That seems too cheap for the stock, which, even though revenue and earnings are slowing, did manage to grow adjusted earnings by close to 22% for the full year in 2025. In short, the sell-off sparked by the removal of certain disclosures may create an opportunity for value investors to buy Tencent Music stock at a very cheap price today -- that is, for those comfortable owning Chinese stocks in their portfolio.Read NextMar 18, 2026 •By Eric VolkmanWhy Tencent Music Entertainment Stock Withered on WednesdayMar 17, 2026 •By Josh Kohn-LindquistStock Market Today, March 17: Tencent Music Plunges on Earnings Miss and User ConcernsMar 17, 2026 •By Jeremy BowmanWhy Tencent Music Stock Was Tumbling TodayAug 12, 2025 •By Eric VolkmanWhy Tencent Music Stock Turned It Up to 11 on TuesdayMar 21, 2025 •By Eric VolkmanWhy Tencent Music Entertainment Group Was Music to Investor Ears This WeekAug 17, 2023 •By John BallardWhy Tencent Music Entertainment Stock Was Up This WeekAbout the AuthorBilly Duberstein is a contributing Motley Fool technology analyst covering semiconductors, hardware, software, and AI, as well as consumer goods. Billy loves looking at the story behind investments from an interdisciplinary point of view, with an equal appetite for high-growth disruptors and beaten-down value names. He is also CEO of Stone Oak Capital, a registered investment adviser in California. He previously worked as a technology analyst for several hedge funds and as a research assistant at Wedbush Securities. Billy holds an MBA in finance from New York University and a bachelor’s degree in music from the University of Virginia.TMFStoneOakStocks MentionedTencent Music Entertainment GroupNYSE: TME$10.13(-1.60%)-$0.17Spotify TechnologyNYSE: SPOT$474.54(-1.65%)-$7.98*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.