Tencent Music shares rises 13.5% after slow start
Chinese streaming giant Tencent Music Entertainment (TME) has risen from a slow start at its December 12 debut on the New York Stock Exchange.
It initially raised $1.1 billion, the lower end of its plan to raise between $1.07 billion and $1.23 billion.
Shares were first worth $13, giving TME a market value of $21.3 billion – slightly less than Spotify’s opening $23.5 billion in April.
However by the afternoon, TME’s shares were up 13.5% to $14.75, raising its market capitalisation to $23 billion.
TME is the third largest Chinese IPO in the US this year. Video streaming platform iQiyi made $2.13 billion in March, and shopping app Pinduoduo bowed with $1.6 billion in July.
The Chinese streaming giant initially planned to go public in the US in October, however, it postponed for two reasons.
Firstly, the market was volatile due to a US-China trade standoff. But a 90-day truce was struck last week.
Secondly, investors are being cautious about tech stocks due to Spotify dropping below its IPO price.
Unlike many streaming services around the world, TME actually makes money.
Between January and September 2018, it generated revenues of $2 billion, with profits up 244% to $394 million.
Tencent Music runs the four most-used mobile music apps in China, namely QQ Music, Kugou Music, Kuwo Music and WeSing.
Combined, the four have over 800 million monthly active users and 23.3 million subscribers.
Among its investors are Spotify with a 9.1% stake (as part of a stock swap). Warner Music and Sony Music bought a total of 68,131,015 ordinary shares, worth approximately $200 million.