Shares of Tencent Music Entertainment Group (NYSE:TME) dropped more than 20% on Wednesday as investors reacted negatively to the company’s fourth-quarter earnings, even though both revenue and profit posted solid year-on-year growth.
The company reported quarterly revenue of 8.64 billion yuan, representing a 15.9% increase from the same period last year, supported by continued expansion in its online music segment. Net profit attributable to shareholders rose 12.6% to 2.20 billion yuan.
Despite the growth, the results fell short of market expectations, particularly as signs of slowing user growth emerged. Monthly active users on the platform’s online music services declined 5% year over year to 528 million, while the number of paying users increased 5.3% to 127.4 million.
The company’s Hong Kong-listed shares dropped as much as 24%, falling to HK$43.6 during trading.
Subscription revenue continued to expand, rising 13.2%, while revenue from non-subscription music services jumped by more than 40%, driven largely by advertising and offline live performances.
Tencent Music also announced that it will discontinue reporting certain operational metrics, including monthly active users and average revenue per user, starting from the next quarter.
For the full year, the company recorded revenue of 32.9 billion yuan, up 15.8% from the previous year. Net profit surged 66.4%, helped in part by a one-time gain.