Tencent Music (NYSE:TME): Exploring Valuation After Strong 2024 Rally and Recent Volatility

Tencent Music Entertainment Group (NYSE:TME) shares recently moved higher, catching the attention of investors interested in emerging trends in the streaming sector. The company’s performance over the past month has sparked some fresh questions about its underlying valuation and outlook.

See our latest analysis for Tencent Music Entertainment Group.

Tencent Music’s share price momentum is a tale of two periods, with a standout year-to-date surge of 60.34% but some recent volatility. The 1-month share price return sits at -20.74% following a rapid run-up earlier this year. Over the long term, investors who held on have been well rewarded, evidenced by a 3-year total shareholder return of 220.66%, even as shorter-term sentiment shifts and valuation debates continue in the streaming space.

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With shares still trading well below analyst price targets despite impressive growth figures, the key question emerges: is Tencent Music undervalued right now, or has the stock already reflected all its future gains?

Most Popular Narrative: 33.9% Undervalued

The narrative’s fair value estimate of $27.47 is significantly higher than Tencent Music’s last close of $18.15, setting the stage for a provocative debate about how much upside remains if projections come to pass.

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 factors contribute to higher gross margins and a defensible market share.

Read the complete narrative.

What is behind the bold target? The focus is on high-margin content, new fan engagement innovations, and projected earnings momentum that few competitors can match. Want to know which critical assumptions and trend forecasts fuel this valuation? Unlock the details in the complete narrative.

Result: Fair Value of $27.47 (UNDERVALUED)

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

However, persistent margin pressures and increased regulatory scrutiny could quickly reverse sentiment if trends worsen. This could challenge the optimistic valuation outlook.

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

Build Your Own Tencent Music Entertainment Group Narrative

If you see things differently or want to dig into the numbers on your own terms, you can easily create your own story in just a few minutes. So why not 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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