In the double Twelfth shopping festival, Tencent Music began to go public.
With good luck, the three major indexes of US stocks closed higher last night. Tencent Music's shares rose to $14, up 7.69 per cent from their offering price of $13, on the back of optimism. Tencent Music's share price continued to rise in after-hours trading, rising to $14.15 as of 19:44 et, giving it a market capitalization of $23.1 billion.
Source: Futu Securities
The world's largest streaming music company by market capitalization was born!
The latest market capitalization of Spotify is $23.096 billion.Tencent Music thus successfully won the throne of the world's largest streaming music company by market capitalization overnight.Tencent Music is also number one in the world in terms of MAU, with Tencent Music at 880 million and Spotify at 191 million as of September 30.
Before yesterday's listing, the comparison of the market capitalization of the two industry giants was still like this: about $23.078 billion for Spotify and $21.3 billion for Tencent Music.
Photo Source: announcement, Futu Cartography
The close relationship between Tencent and Spotify has long been known, with Tencent Music holding 2.5 per cent of Spotify and Spotify holding 8.9 per cent of Tencent Music. In addition, as shown in the above figure, Spotify made its first profit in three quarters this year because of its investment in Tencent Music.
Many people say that Tencent Music is more like a live broadcast company, while Spotify is a pure streaming music company. In the short term, there is no problem with this view, but in fact, Tencent Music's live broadcast is focused on singing (singing by all, live by KuGou, live by cool). In addition, more than 600 million of Tencent Music's monthly active users come from online music services, so it is undeniable that Tencent Music is a streaming music company in nature.
Why should Tencent Music "defeat" Spotify?
Why is the scale and rate of paying users of online music less than that of Spotify, and Tencent Music can still get a relatively high valuation?
This is inseparable from its income structure. Spotify generates 90 per cent of its revenue from online subscriptions, while Tencent Music earns 70 per cent of its income from the social entertainment business and only about 30 per cent of its income comes from online music contributions. It may seem strange, but this is the embodiment of the characteristics of Chinese consumption. At present, the payment habit of domestic users is still in its infancy and lacks the mature payment consciousness of foreign developed markets, so Tencent Music combines the social attributes of his 2C products while training online music fee users. to carry out social entertainment services (mainly live streaming and online singing services). This wise move not only enables Tencent Music to get rid of the loss of the streaming music platform, but also provides more space for its valuation.
In addition, Tencent Music's industry and environment are still in the initial stage of development. according to data, it is estimated that China's online singing and music-centric streaming services will reach 130.5 billion yuan by 2023, with an annual compound growth rate of 34.6%!
There is no doubt that there is a huge space in this industry. Tencent's four core products occupy a leading position in the industry (the market share is as high as 70%), while Tencent's father supports the content. In terms of copyright, a deep moat has been built (over 20 million songs are licensed, which is three times for the second place). With the gradual maturity of the industry, it is conceivable that Tencent's scale effect advantage will become more and more obvious in the future. The strong will always be strong!
In the future, Tencent Music will maintain income growth, the main focus will be, on the basis of stabilizing and increasing the overall platform MAU, raise the payment rate and ARPU of online music services (currently 8.50 yuan, compared with 121yuan for Spotify); increase the stickiness of users of social entertainment services, we will also continue to pay attention to this aspect of the data.
Generally speaking, Tencent Music, who went up against the wind in the cold winter, achieved ideal results on the first day of trading. Peng Jiaxin, CEO of Tencent Music Entertainment Group, said that despite the current market fluctuations, IPO is natural and "the right time to do the right thing". He is satisfied with the result of IPO, and simply pursuing the rise and fall of the stock price is not the company's goal. "focus on doing the business well, and in the long run, the stock price will naturally reflect value. "
(editor / Wu Dongxia)
