(Bloomberg Opinion) -- Investors were mighty disappointed in Tencent Music Entertainment Group's debut album. While revenue rose 50 percent for the fourth quarter and EPS beat estimates, shares dropped 7.4 percent in post-market trading.
The Chinese music and entertainment company listed in December and shares started to take off in mid-January. Traders last night looking past the album sleeve probably saw a rundown of numbers that left them feeling a little flat.
Social entertainment, Tencent Music's largest business which includes live streaming and online karaoke, experienced only a mild increase in monthly active users.
That said, those offerings may have struck a chord, with users spending more per month.
Its music business – larger by users but smaller by revenue – faced even weaker growth, and seems to be struggling to sign up more customers.
What's worse, those who've been convinced to pay have cut spending on the music platform.
While rising revenue make for a good headline, the evidence shows more money is being spent to drive that figure. Marketing as a percentage of revenue tracks this differential, with the figure climbing 72 basis points last year compared with 2017.
Tencent Music's public career is young, yet this debut performance shows it needs to polish its act.
To contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
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