Tencent Music’s Trading Debut

Tencent Music Entertainment Group climbed in its U.S. trading debut after pricing its initial public offering at the bottom of a marketed range.

That makes it one of the largest tech listings of the year, but the pricing is at the bottom end of its $13-$15 range, indicating that the much-anticipated IPO has felt the effects of an uncertain market. Indeed, the company is said to have paused the listing process, which it started in early October, for a time so choppy are the waters right now — and that’s not even mentioning a shareholder-led lawsuit that was filed last week.

Still, this listing gives TME — Tencent Music Entertainment, a spin-out of Tencent — an impressive $21.3 billion valuation, which is just below the $30 billion that Spotify commanded when it went public earlier this year via an unconventional direct listing. TME was valued at $12 billion at the time of Spotify’s listing in Q1 of this year, so this is also a big jump. (Meanwhile, Spotify’s present market cap is around $24 billion.)

Notably, though, TME is profitable. The same can’t be said for Spotify and likely Apple Music — although we don’t have financials for the latter. That’s down to the unique business model that the Chinese firm operates, with subscription and virtual goods a major driver for its businesses, while Tencent’s ubiquitous WeChat messaging app helps it reach users and gain virality.

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Posted byarketyp