Goldman Sachs issued a research report indicating that Tencent Music's (01698.HK) share price has declined over the past six months, reflecting growing market concerns. These include challenges posed by competitors in the music streaming platform space, potential margin pressures from an increasing proportion of non-subscription businesses and live event sponsorship, as well as recent discussions on the impact of AI across the entire music industry.
The firm expects Tencent Music’s music revenue to grow by 17% year-over-year in the fourth quarter of 2025, driven by double-digit growth in subscription services. Additionally, it forecasts the company’s overall revenue for this year to increase by double digits year-over-year, with stable margins as the company focuses on its strategy to enhance service offerings and monetize memberships by expanding average revenue per paying user (ARPU).
Given that the stock is currently trading near the lower end of its valuation range over the past five years, Goldman Sachs views the risk-reward profile as attractive and maintains a 'Buy' rating. The target price for Tencent Music’s Hong Kong-listed shares (01698.HK) has been lowered from HKD 90 to HKD 78, while the target price for Tencent Music’s U.S.-listed shares (TME.US) has been reduced from USD 23 to USD 20.
