Tencent Music Entertainment Group (TME/TME.N), what many refer to as the “Chinese Spotify,” went public in the US last week (Dec. 12), raising $1.1 billion in its IPO, to value the music arm of the Chinese gaming, technology and internet-related conglomerate at $21 billion.
Having raised $7.9 billion before its debut, according to Refinitiv data, TME is reported to have experienced the effects of an uncertain market and trade war, as shares were priced at the bottom end of its $13-$15 target range.
Compounding the uncertainty are reports skeptical of Tencent’s 880 million monthly average user-base, citing only 800 million internet users in the entire country. Creative or double accounting methods is speculated as it operates karaoke and live-streaming apps QQ Music, Kugou and Kuwo, and WeSing (parent company Tencent controls WeChat and QQ messaging platform, boasting a cumulative 1.8 billion users).
Tencent’s paid monthly subscribers were reported to the tune of 23 million. By comparison, Spotify reports 191 million users and 87 million subscribers across 78 markets, but has not yet launched in China. Though Spotify is still shy of turning a profit, TME reports profits since 2016—70 percent form in micropayments, where fans tip their favorite stars through virtual gifts online, according to reports.
In a unique share swap, Spotify is said to hold 9 percent of the shares TME, while Tencent and TME holds a 7.5 per cent stake in Spotify, making them the third-biggest stakeholder after founders Daniel Ek and Martin Lorentzon. Warner Music and Sony Music bought $200m worth of TME stock in October.
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