Tencent Music Entertainment will strain to hit Spotify’s high notes. China’s social media and gaming titan is floating its music-streaming arm at a valuation of up to USD 24.5 billion. Still, the company’s huge premium to Spotify is hard to justify.
At the top of the marketed price range, Tencent Music will be worth roughly the same as Spotify. Assuming the Chinese group’s revenue keeps growing at the same run-rate as in the previous nine months, to USD 2.6 billion, that represents an ear-splitting 9.4 times this year’s sales. That’s more than twice the multiple Daniel Elk’s outfit commands.
True, growth has been impressive, and unlike Spotify, Tencent Music is already in the black. Earnings in the nine months to September more than tripled from a year earlier to USD 393 million.