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Why Tencent Music Entertainment Group (TME) stock is falling today?

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Shares of Tencent Music Entertainment Group (TME) were low today amid the spread of a proposal by the Chinese government to establish a joint venture with local tech to access the consumer data. TME stock price saw a downtrend of 8.89% to reach $18.55 a share at the time of this writing. AT the previous trading session, TME stock was red with a 12.17% drop. Let’s deep dive to explore more the current scenarios.

State-backed Company

The Chinese government is planning to create a state-backed company along with its biggest eCommerce and online payment platforms in order to access the lucrative data of the consumers to tighten the grip over their activities on the internet. This step will help regulators in introducing regulatory laws in the tech world in the future. Companies like Alibaba Group Holding Ltd, ByteDance Ltd., and Meituan and Tencent Holdings Ltd were initially encouraged to support the government in this regard by sharing the consumer data from e-commerce to social media platforms.

Financial View of TME stock

On  March 22, 2021, TME stock announced its fourth quarter and full-year unaudited results of 2020 the summary of which is given below

Total Revenues surged by 14.3%YoY to reach RMB8.34 billion in the fourth quarter of 2020. Online Music service revenues showed 29% growth in the fourth quarter of 2020  as compared to the same quarter of 2019 while revenues from subscriptions surged by 41.9% to reach RMB1.58 billion in the last three months of 2020. Overall revenue of the year 2020 totaled RMB29.15 billion representing a 14.6% increase over the year.TME generated  RMB25.43 billion in 2019.

Conclusion

Things are gloomy for TME stock as far as market sentiment is concerned. Tencent Music’s recent earnings report shows that TME stock has progressed over the year as it met the expectations of analysts for both sales and earnings. We saw a couple of fluctuations in the TME stock price this week as it soared after its earnings results and then happened to be down might be due to analyst downgrade and still continuing the bearish trend.

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