Public Markets

Tencent Music Pares Down IPO Price To $13, The Bottom Of Its Target Range

Amid more than a week of high market volatility and major pullbacks in most major indices, Tencent Music wound up raising less in its IPO than initially hoped.

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The company priced its shares at $13, valuing the company at $21.3 billion, the bottom of a price range the company announced last week. This raises $1.1 billion in the offering, which to be sure is still a hefty sum. But it’s still $300 million less than what the company could have raised, if it priced at the top of its original range.

Early last week, Tencent Music filed updated IPO documents with the SEC. As Crunchbase News covered at the time, the streaming music company was hoping to raise as much as $1.41 billion, pricing its shares between $13 and $15.

Back in October, when the company filed its initial paperwork, Crunchbase News analyzed some of its financials. Tencent Music is profitable, a rare feat in the music streaming industry. The updated filings from last week revealed further progress for the company. In the quarter ending Sept. 30, 2018, Tencent Music generated about 1.06 billion RMB (US$155 million) in profit on just under 5 billion RMB (around US$727 million) in revenue.

And it grew fast. Crunchbase News’s Alex Wilhelm and Savannah Dowling found that Tencent Music “grew just over 10 percent from the sequentially preceding quarter and 71 percent from the year-ago quarter. Not bad.”

The latter half of 2018 hasn’t been kind to some in the music streaming business. Spotify, arguably the company to beat in the streaming game these days, is now trading below its initial direct listing price of $165.90. We’ll see what 2019 brings for what’s likely to be one of the last big tech IPOs of the year.

Illustration: Li-Anne Dias

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