Tencent Music [TME] will launch its scaled down U.S. IPO on Wednesday. China's largest music streamer priced shares at $13 ahead of its NYSE listing hoping to raise $1.1 billion. The IPO had originally been scheduled for October 18th.
Tencent was valued at $30 billion in the Fall of this year, but today's stock debut comes with a reduced $12.3 billion valuation. TME had been valued at $12 billion at the time of Spotify’s $31B listing in Q1 of this year.
A rocky stock market, worsening US/China relations, and continued questions over the financial viability of Spotify and the streaming music business model, have all contributed to Tencent Music's rollercoaster valuation.
But there are many differences between TME and Spotify. The most obvious is that the Chinese streamer claims to be profitable. The other, and the reason for its profitability is that, unlike Spotify, TME is a web of music services including on-demand, karaoke and live streaming, with each supported by ads, subscriptions and virtual gifts.
Tencent Music claims 800 million users across its services, though analysts point out that includes duplicates, as many Chinese use more than one TME app or service.
Spotify Gains With Tencent IPO
Last year, Tencent and Spotify did a stock swap, taking an estimated 9% non-controlling interest in the other. In addition to opening up potential new opportunities for both companies, the stock deal aligned two of the worlds top streaming services music streaming services in future licensing negotiations with labels and music publishers.