Tencent Music (NYSE:TME): Assessing Valuation Following Analyst Buy Ratings and Q3 Growth in Digital Services

Tencent Music Entertainment Group (NYSE:TME) caught attention after BNP Exane Paribas initiated coverage with a Buy rating, highlighting third-quarter results that showed online music service revenue increase and value-added services expand.

See our latest analysis for Tencent Music Entertainment Group.

Tencent Music's strong third-quarter showing and fresh analyst attention have kept investor sentiment upbeat, even as the share price has pulled back 17.3% over the past month and 24.9% across the last 90 days. Despite this near-term volatility, momentum is still visible in its impressive 62.99% year-to-date share price return and a robust 53.2% total shareholder return over the last year. This suggests that optimism around its evolving music and live entertainment strategy remains high.

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With the stock pulling back despite positive analyst coverage and continued growth in music and value-added services, the key question emerges: is Tencent Music undervalued at current levels, or is the market already pricing in all of its future potential?

Most Popular Narrative: 31.7% Undervalued

Tencent Music Entertainment Group’s most widely followed narrative puts fair value at $27.03, which is well above its last close of $18.45. The narrative draws on ambitious financial projections and the power of transformative digital innovation as key valuation catalysts.

Proprietary content development, exclusive partnerships (with Korean labels and Chinese artists), and investments in original artist incubation strengthen content differentiation, support premium pricing, and reduce long-term content costs. These efforts contribute to higher gross margins and defensible market share.

Read the complete narrative.

Curious which assumptions ignite this price tag? Hint: it is not just future subscriber growth, but bold forecasts around user engagement, new monetization strategies, and tech-powered operating leverage. Don’t miss the detail behind these numbers. Click to see the full story behind this high-conviction undervaluation claim.

Result: Fair Value of $27.03 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising competition from Bytedance’s Soda Music and a shift to lower-margin offline revenues could dampen growth expectations and challenge the bullish narrative.

Find out about the key risks to this Tencent Music Entertainment Group narrative.

Build Your Own Tencent Music Entertainment Group Narrative

If the prevailing view does not align with your own insights or you would prefer to analyze the numbers independently, you can create a custom perspective in under three minutes. Do it your way

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Tencent Music Entertainment Group.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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