Now comes crunch time for Tencent Music Entertainment Group insiders and early backers who have to decide on Monday whether or not to cash out of the Chinese music
entertainment service when its 180-day lockup expires.
The decision is made more torturous by a 34 percent decline in the stock since a peak in mid-March. For some insiders and pre-IPO investors, this is their first crack at offloading stock since the initial public offering priced at $13 in early December.
After almost reaching $20 a share at the end of the winter, the stock now trades for only pennies above the IPO price.
The stock has gained a mere 1.5 percent since its $1.07 billion equity raise, the 10th largest IPO of 2018. But most
of Wall Street still figures prospects are bright for Shenzhen, China-based Tencent Music. In its first financial
report since going public, Tencent topped analysts’ estimates.
According to Bloomberg Intelligence, Tencent Music “is likely to remain the world’s only online music-streaming platform that can generate sustainable profit” despite an uptick in content investments. And while peers such as Spotify Technology SA generate most of their revenue from paid subscriptions, analyst Vey-Sern Ling says Tencent Music “can monetise users more efficiently through the additional provision of social entertainment, including live-streaming and online karaoke.”
Loop Capital became the latest sell-side shop to weigh in, initiating coverage of Tencent Music’s ADRs with a buy rating and $19 price target.