Tencent Music Stock Slips Despite Solid Q3 ’25 Earnings Report

Photo Credit: Tencent Music

Despite posting double-digit revenue and profit gains for Q3 2025, Tencent Music (NYSE: TME) saw its stock price slip by over 8% during Wednesday’s trading.

The QQ, Kugou, Kuwo, and WeSing operator detailed its seemingly solid third-quarter performance today, pointing to 20.6% year-over-year (YoY) revenue growth to CNY 8.46 billion (currently $1.19 billion).

That growth percentage, execs noted during the corresponding earnings call, is Tencent Music’s best since Q1 2021. And in keeping with more recent trends, the lion’s share of the Ximalaya parent’s third-quarter revenue derived from core streaming (and especially subscription) operations.

All told, 551 million MAUs (down 4.3% YoY) drove the company’s online music services revenue to $979.93 million/CNY 6.97 billion (up 27.2% YoY) on the quarter, the report shows.

Therein, 125.7 million paid users (up 5.6% YoY) fueled a 17.2% YoY subscription revenue improvement to $632.67 million/CNY 4.50 billion, per the business. (The long-sliding social entertainment category once again dipped, this time by 2.7% YoY to $209.48 million/CNY 1.49 billion.)

Furthermore, average revenue per paid user grew 10.2% YoY to $1.67/CNY 11.90, the breakdown indicates. Regarding the discrepancy between the top-level subscription revenue and ARPPU increases: The SVIP tier remains a key focus for Tencent Music, which has added lossless to the diehard-geared package and is teeing up a spatial audio launch.

Also factoring into the superfan offering are QQ’s AI-equipped “interactive community,” Bubble, early access to albums, and “collectible NFC cards,” according to Tencent Music.

Adjacent to the SVIP emphasis, Tencent Music has been leaning into merch and live concerts for some time now.

There’s certainly a financial upside to arranging domestic shows for global talent; in keeping with its name, the new “TMElive International Music Awards” specifically books international acts.

However, the company is organizing tours outside China as well; during Q3, TME staged 14 more shows for G-Dragon across Australia and Malaysia. In the longer term, the ability to handle every aspect of the superfan experience, from streaming to concerts and exclusives to merch, could drive material growth.

More immediately, though, Tencent Music acknowledged an 18.8% YoY cost-of-revenue jump for Q3, to $672.03 million/CNY 4.78 billion, “mainly due to increased costs related to offline performances,” IP, merch, and advert-agency fees.

Additionally, Tencent Music reported Q3 net profit of $302.27 million/CNY 2.15 billion, representing a 36% YoY spike but a bit of a slide from Q2’s $338.83 million/CNY 2.41 billion.

The quarterly falloff may have contributed to TME’s 8.4% valuation decline during today’s trading. Worth about $19 per share at market close, Tencent Music stock is still up roughly 68% from the top of 2025.