Tencent Music Entertainment Group has been compared to Spotify - the two streaming companies even have investments in one another. Now the Chinese tech company has opened on the New York Stock Exchange with a similar valuation to the Swedish streaming giant.
Despite volatility in Chinese tech stocks and the uncertainty resulting from the country's trade standoff with the US, Tencent Music opened at $14.10, which was 8.5% above the IPO price of $13 yesterday (December 12).
By the afternoon, the stock was up 13.5% but ended the day settling at around 8.5% up. Its market capitalisation of approximately $23 billion (£18.2bn) was similar to Spotify’s stock market debut. The Swedish streaming company’s share price gain of more than 30% in the months following its IPO has since fallen away.
While Tencent Music CEO Cussion Kar Shun Pang and his team were all smiles as the company went public, the IPO had been delayed and the price was below the original forecasts of up to $30bn ($23.8bn).
The IPO raised $1.1 billion (£871m), which will help expand the catalogue, develop new services and increase marketing.
Spotify and Tencent are mutual investors. The Chinese company, part of Tencent Holdings, also has investment from Sony Music Entertainment and Warner Music Group. It has also teamed with Sony on a dance label.
The company is China’s largest music platform, with more than 800m monthly users across services including QQ Music, KuGou, Kuwo and karaoke app We Sing – many more than Apple Music and Spotify.
Unlike Spotify, Tencent is actually profitable. For the period January to September, profits were up 244% to $394m (£312m). In a filing to the Securities and Exchange Commission, Tencent said it has “achieved growth and profitability at scale”.