Shares of Tencent Music Entertainment plunged to $10.35 on March 18, extending a brutal two-day selloff that has erased roughly 30% of the stock's value since March 13. The catalyst: a Q4 earnings report that beat on revenue but missed on nearly everything investors care about most — profits, users, and the outlook ahead.

TME Lost a Third of Its Value in Two Days — Is China's Music Giant Hitting a Wall?

Shares of Tencent Music crashed to $10.35 on March 18, deepening a two-session rout that has wiped roughly 33% off the stock since last week. The Q4 2025 report revealed a mixed picture: EPS of RMB 1.41 missed the RMB 1.54 forecast by 8.4%, even as revenue beat estimates, reaching RMB 8.64 billion.

Volume on March 17 alone surged to 63.9 million shares — 823% above the three-month average — a stampede for the exits.

  • The Top Line Looked Good, but the Bottom Line Told the Real Story. Revenue rose 15.9% to $1.24 billion, powered by a 21.7% jump in online music services and a 40.8% surge in non-subscription music revenue. Yet an effective tax rate of 70.5% crushed profits. J.P. Morgan flagged that subscription revenue growth slowed to 13% in Q4, down from 17% in Q3 — a deceleration that matters because subscriptions are the company's most predictable revenue stream.

  • 28 Million Users Vanished, and the Company Wants to Stop Talking About It. Paying users grew 5.3% to 127.4 million, but total monthly active users fell from 556 million to 528 million — fewer people using the apps overall, even as paying customers spent more. Critically, management plans to stop disclosing most quarterly operating metrics , a transparency reduction that unnerved analysts already worried about a shrinking user funnel.

  • Wall Street Turned Cold, Fast. J.P. Morgan downgraded TME from Overweight to Neutral with a $12 price target.

Benchmark's Fawne Jiang cut her rating from Buy to Hold.

Jefferies maintained Buy but slashed its target to $23, while Macquarie cut to $10.70 — barely above today's price. The resulting analyst range of $10.70 to $23 highlights deep uncertainty over margin recovery.

  • AI and a Rising Rival Are Squeezing Margins. Macquarie rooted its downgrade in competition from ByteDance-backed Soda Music, warning it could slow TME's revenue-per-user growth.

Multiple analysts also cited AI-driven structural challenges eroding TME's market position. With rivals spending aggressively to lure users, TME faces a choice: protect margins or fight for share — a trade-off that explains why Q1 2026 revenue guidance implies a 9% sequential decline , even with 7% year-over-year growth.

The bull case rests on a new $0.24-per-ADS annual dividend totaling ~$368 million and strong cash generation. But when your user base is shrinking, your margins are under siege, and you're choosing to share less data with investors, a dividend alone won't stop the bleeding.