When there's blood in the streets after the earnings beat, we put on our BUY cleats (TME)

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We are rating TME (Tencent Music Entertainment) a STRONG BUY, after last night's earnings call. The share price has dropped even further than the epic descent it has been on as of late, which I covered in my recent article 'The Great Collapse Won't be Their End'. In addition to the bullish sentiment we expressed in that article, the price has decreased over another 20% in the light of the fact that as Reuters puts it 'Tencent Music takes copyright rules in stride, earnings beat estimates'. 

This company continues to profit and continues to beat estimates. Yet, the streets are bloody, and we know this means it's time to BUY. We don't want to ignore the effect of the recent Chinese regulations. Our thesis is that those effects are priced into these shares at prices significantly above the current levels. We feel so confident in our analysis of this position that we have decided to put out this STRONG BUY rating on TME. It may fall further than it has at the time of posting this rating, though we feel this is a great time to get in and that the bottom is near. The bears will say that the company is planning on delaying its Hong Kong listing and China has released weak retail and production data. Yet we say that the delay of the listing is a prudent measure as clearly they need time to adapt their plans to the ever-evolving goal posts. The weak retail and production data is hardly even relevant to TME considering their own numbers are robust. It is our position that Tencent's own numbers should have more effect on the share price than retail data, considering they aren't a retail company. Wall Street analysts currently have issued 17 Buy Ratings on TME while there is 7 Hold Ratings and 0 Sell Ratings with an average target of $19.51. This supports our view that this is an opportunity to Buy for gains in excess of 100% within the year.


Update: Feb 15, 2023  -  We closed out this trade for a considerable loss in Feb, 2022. Despite it's recent momentum, we aren't recommending this as a BUY at the present time.


I am/we are long TME. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company that is mentioned in this article. The price of TME as of the moment of publication of this article was $7.66

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