Tencent Music Entertainment Group has made headlines recently as it enters advanced negotiations to acquire the Chinese podcast startup Ximalaya for USD 2.4 billion. This strategic move is expected to bolster its presence in the audio streaming market. Over the last quarter, Tencent Music's share price rose 15%, a performance likely buoyed by the acquisition discussions, alongside a strong annual earnings report showing increased revenue and net income. However, a share buyback and an ex-dividend date announcement may have slightly countered broader market movements, which saw general positive momentum.

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Tencent Music Entertainment Group's ongoing negotiations to acquire Ximalaya could significantly influence its future trajectory. This acquisition, valued at US$2.4 billion, aligns with Tencent Music's dual-engine strategy of content and platform innovation, potentially enhancing user engagement and revenue growth through expanded audio offerings. The company's share price experienced a 15% increase over the last quarter, likely buoyed by this acquisition news and positive annual earnings. Over the longer term, Tencent Music's total shareholder return of 233.70% over three years underscores strong performance compared to a 5.9% return for the US market in the past year, although it underperformed the Entertainment industry, which returned 40.3%.

The positive market reaction may continue to influence Tencent Music's revenue and earnings forecasts. Analysts project revenue growth of 8.9% annually, driven partly by this expansion into audio streaming. This aligns with expectations of increased user engagement, higher subscription revenue, and improved advertising margins. With analysts setting a price target of US$16.35, the current share price reflects a discount of approximately 23.6% to this target, indicating potential for further growth as the company executes its strategic initiatives and the acquisition potentially nears completion. These developments emphasize Tencent Music’s commitment to expanding its reach within the audio streaming industry.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NYSE:TME.

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