Tencent Music announced it will stop reporting key user data, triggering market panic. Its shares plummeted more than 20% in a single day in both the US and Hong Kong markets. While the company reported strong earnings, underlying concerns about user growth have come to the forefront.

Following the latest financial report release, on March 17, Eastern Time, the US-listed shares of Tencent Music (TME) plunged, closing down 24.65% at $11.37, marking a new 52-week low.

On March 18, Tencent Music's Hong Kong-listed shares (1698.HK) fell in sync, declining over 20% throughout the day. The stock closed at HK$44.72, down 21.82%.

On the surface, Tencent Music delivered what could be considered a robust report: full-year revenue grew 15.8% year-over-year to RMB 329 billion; adjusted net profit was RMB 99.2 billion, up 22.0% year-over-year; and the number of Super VIP members surpassed the 20 million mark.

However, behind these impressive figures, the core user base is shrinking. Key monthly active user metrics showed a significant decline. The company's decision to cease disclosing crucial operational indicators led investors to react negatively.

Monthly active users decreased by 23 million sequentially.

For content platforms primarily serving consumer users, monthly active user count is a vital metric for gauging popularity. However, platforms for online reading, music, and video seem inevitably to face sustained negative growth after user numbers hit a ceiling.

The latest report shows that in the fourth quarter of 2025, the monthly active users for Tencent Music's online music service were 528 million. This represents a 5% decrease compared to 556 million in the same period of 2024 and a loss of 23 million users from the previous quarter's 551 million.

Viewed over a longer period, the consistent decline in its monthly active user base has become an expected trend. Since first experiencing a year-over-year drop in the fourth quarter of 2021, Tencent Music's online music monthly active user count has declined for 17 consecutive quarters by the end of 2025.

A sharp stock price drop following earnings is not unprecedented. In the third quarter of 2025, monthly active users for the online music service were 551 million, down 4.3% year-over-year. The day after those results were released, on November 13, 2025, Tencent Music's Hong Kong shares fell 10.69% in a single day. Since the Q3 report, the stock has accumulated a decline of over 47%, nearly halving in value.

While Tencent Music owns platforms like KuGou Music, QQ Music, and KuWo Music, its user base is gradually eroding. Conversely, ByteDance's Tomato Music and Soda Music, traditional rivals of Tencent, are expanding their reach and disrupting the online music market landscape.

Data from QuestMobile's "2025 China Mobile Internet Autumn Report" previously highlighted this shift clearly: while the overall mobile music app industry showed a downward trend, Soda Music demonstrated notably high growth.

In September 2025, the top five mobile music apps by monthly active users were KuGou Music, QQ Music, NetEase Cloud Music, Soda Music, and KuWo Music. The year-over-year changes were even more pronounced: KuGou Music had 210 million MAUs (-8.1% YoY), QQ Music had 190 million (-2.8% YoY), NetEase Cloud Music had 147 million (+1.5% YoY), Soda Music had 120 million (+90.7% YoY), and KuWo Music had 113 million (-8.0% YoY).

ARPPU remained flat sequentially.

With the persistent decline in monthly active users becoming a difficult trend to reverse, Tencent Music's growth strategy in recent years has shifted towards monetizing its paying user base, attempting to offset the overall traffic decline by extracting more value from existing users.

In Q4 2025, revenue from Tencent Music's online music service grew 21.7% year-over-year to RMB 7.1 billion. Online music subscription revenue within this grew 13.2% to RMB 4.56 billion, accounting for 64.2% of the total. The company reported continuous upgrades to its subscription system and member benefits, with Super VIP users exceeding 20 million.

The number of paying users for the online music service reached 127.4 million in the quarter. On a positive note, the paying user penetration rate for online music reached 24.1%, adding 1.7 million users sequentially. Average revenue per paying user (ARPPU) increased to RMB 11.9 from RMB 11.1 a year earlier, a 7.2% year-over-year increase.

However, some concerning signals also emerged. The year-over-year growth rates for the paying user base across the four quarters of 2025 were 8.3%, 6.3%, 5.6%, and 5.3% respectively, showing a 3-percentage-point deceleration from the start to the end of the year. For context, this growth rate remained in double digits throughout 2024. Clearly, the expansion of the paying user base has slowed significantly.

Additionally, while ARPPU grew 7.2% year-over-year, this increase was the lowest among the four quarters of the year. Furthermore, the ARPPU of RMB 11.9 was unchanged from the previous quarter.

This implies that as user growth benefits fade and the active user base shrinks, it will become increasingly challenging to convince more users to pay and to extract more revenue from each paying user over time.

Ceasing disclosure of key user data.

With the conclusion of its 2025 financial disclosures, Tencent Music announced at the start of the new fiscal year that it will stop reporting certain quarterly operational metrics. These include online music monthly active users, number of paying users, and ARPPU. Instead, it will disclose the total number of music service paying users annually, at year-end.

Tencent Music justified this change by stating that at the time of its IPO, paying subscriber count and ARPPU were key metrics for its online music service. However, the company's business model has evolved significantly in recent years. With the expansion of advertising and other IP-related businesses, and the provision of multi-tiered membership services for online music subscriptions, the contribution of each paying member to the overall business varies. Consequently, the company is increasingly focusing on revenue and profit as its core performance indicators.

Looking at the revenue structure, social entertainment services revenue, primarily comprising music-focused live streaming, shrunk to RMB 1.54 billion in Q4 2025. This segment's full-year revenue was RMB 6.176 billion, continuing its year-over-year decline. Within the dominant online music business, while subscription revenue contributes over 60%, its growth in recent quarters has lagged far behind that of non-subscription revenue.

Since the second quarter of 2025, non-subscription business has entered a phase of rapid growth. In Q4 2025, revenue from this segment grew 40.8% year-over-year. Although this pace slowed compared to the previous two quarters, it remains high, contributing 29.4% to total revenue.

This growth is primarily driven by the commercialization of music IP derivatives, including offline performances, advertising, and artist merchandise. A recent Huatai Securities research report suggested that leveraging its advantages in pan-traffic distribution and partnerships with top labels and artists to continuously broaden the growth boundaries of the non-subscription business could make this segment the company's second growth curve over the next 2-3 years.

However, from an investor's perspective, Tencent Music's decision to stop reporting key quarterly data introduces uncertainty about its future trajectory. The market clearly needs time to digest the implications of this change.

This decision has precedent in the streaming industry. On April 19, 2024, global streaming giant Netflix announced alongside its earnings report that it would stop reporting quarterly subscriber numbers and average revenue per membership. Netflix's stock fell 9.09% that day, although it recovered the losses within just two days. It is important to note, however, that Netflix's reported figures at that time exceeded Wall Street analysts' expectations, with net profit showing impressive growth, and its stock was in an upward trend.

Netflix's model may be difficult to replicate. Following the earnings release, several institutions adjusted their ratings and target prices for Tencent Music. JP Morgan downgraded Tencent Music from "Overweight" to "Neutral" and slashed its target price: halving the US stock target from $30 to $12 and reducing the Hong Kong stock target from HK$120 to HK$48. JP Morgan cited that the downgrade was not due to a substantive deterioration in TME's business, but rather a shift in its investment narrative from a "clear subscription compound growth story" to a "vague multi-engine growth story," requiring the market time to re-anchor its valuation.