TME Should I Buy
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Tencent Music Entertainment Group (TME) is not a strong buy at the moment for a beginner, long-term investor with $50,000-$100,000 available for investment. While the company has shown strong financial growth in the latest quarter and maintains a solid revenue base, the technical indicators are bearish, and there are no immediate positive catalysts to drive the stock higher. Additionally, the recent analyst downgrades and lack of significant trading trends suggest a neutral sentiment. Holding the stock or waiting for clearer buy signals would be more prudent.
The technical indicators for TME are bearish. The MACD histogram is negative and expanding downward, the RSI is neutral at 27.015, and the moving averages indicate a bearish trend (SMA_200 > SMA_20 > SMA_5). The stock is trading near its support level of 15.36, with resistance at 16.177. Overall, the stock lacks upward momentum.
The company reported over 20% year-over-year revenue growth in the latest quarter, driven by a growing subscription base and increased average revenue per paying user.
Net income increased by 36.01% YoY, and EPS grew by 38.00% YoY, showcasing strong financial performance.
Marathon Asset Management sold 559,011 shares in Q4, reflecting a capital reallocation strategy.
Analysts have recently lowered price targets, with Morgan Stanley reducing its target to $25 from $27.50 and BofA lowering its target to $21 from $25, citing no imminent re-rating catalysts.
The MACD and moving averages indicate a bearish technical trend.
In Q3 2025, Tencent Music reported a 20.64% YoY increase in revenue to $8.463 billion, a 36.01% YoY increase in net income to $2.153 billion, and a 38.00% YoY increase in EPS to 0.69. Gross margin improved by 2.04% YoY to 43.51%. These figures highlight strong financial growth and operational efficiency.
Morgan Stanley and BofA have both lowered their price targets for Tencent Music, with Morgan Stanley maintaining an Overweight rating and BofA maintaining a Neutral rating. Analysts have expressed concerns about the lack of imminent catalysts and have adjusted their earnings forecasts downward for FY25-27.
