Tencent Music Entertainment Group Surpasses Spotify in Revenue Growth and Profitability Amid China's Dominance in the Music Streaming Market

Tencent Music Entertainment Group (TME) outperformed Spotify with a 122% total return in 2025, driven by accelerating revenue growth, improved profitability, and significant market capitalization gains. TME dominates the Chinese music streaming market with over 550 million monthly active users and nearly 125 million paying users. Spotify invested $1.6 billion in TME, recognizing its strength in the market. TME's Q2 earnings showed strong growth and profitability improvements, with revenue up 18% and gross margin increasing by 240 basis points.

In 2025, Tencent Music Entertainment Group (TME) achieved a remarkable total return of approximately 122%, significantly outperforming Spotify. This impressive performance was driven by accelerating revenue growth, enhanced profitability, and substantial market capitalization gains. TME's dominance in the Chinese music streaming market is evident, with over 550 million monthly active users and nearly 125 million paying users.

Spotify, recognizing TME's strength in the market, invested $1.6 billion in the company. This investment underscores TME's market leadership and strategic importance. TME's Q2 earnings report further highlighted its strong performance, with revenue up by 18% and a significant improvement in gross margin, which increased by 240 basis points year-over-year.

Despite its dominance in China, TME still has considerable room for growth. With a population of over 1.4 billion, TME's paying user base represents only 9% of the country. This indicates a substantial growth potential within the Chinese market. Additionally, TME's forward price-to-earnings (P/E) ratio of around 27x appears more attractive compared to Spotify's forward P/E of over 59x.

Investors should closely monitor TME's ability to sustain its growth trajectory and capitalize on the vast market opportunities within China. The company's strong financial performance and Spotify's significant investment in TME make it an intriguing investment opportunity for those seeking exposure to the Chinese music streaming market.

References:
[1] https://www.marketbeat.com/originals/tencent-music-stock-outshines-spotify-as-chinas-music-giant/
[2] https://www.ainvest.com/news/tencent-music-entertainment-group-roce-trends-future-outlook-2508/