Tencent Music Entertainment Group (TME) Could Be Worth Nearly 90% More: Here’s the Investment Case Attiya Zainib Tue, November 10, 2026 at 4:30 PM EST 3 min read ^GSPC -0.38% TME -0.85% TME -0.85% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Moon Capital Management an investment management company, recently released its Q3 2026 investor letter. A copy of the letter can be downloaded here. The letter reported that its equity portfolio gained approximately 4% during the first nine months of 2026, compared with an approximately 12% year-to-date return for the S&P 500. The firm noted that market gains remained narrow, with nearly half of S&P 500 constituents declining during the period and the median stock gaining only about 4%. Much of the letter focused on AI investment, as major technology companies are expected to spend approximately $1.2 trillion on capital expenditures in 2027 and another $1.4 trillion in 2028. Although the semiconductor industry has benefited from strong demand, with the S&P Global Semiconductor Index rising approximately 95% through September, Moon Capital questioned whether the enormous infrastructure investments would generate adequate returns. The firm has avoided direct AI investments because it remains uncertain which companies will ultimately capture the economic benefits. The firm remains focused on businesses whose economics it can assess with confidence and whose shares trade at meaningful discounts to estimated intrinsic value. In addition, please check the Fund's top five holdings to know its best picks in 2026.
In its third-quarter 2026 investor letter, Moon Capital Management highlighted stocks like Tencent Music Entertainment Group (NYSE:TME). Tencent Music Entertainment Group (NYSE:TME) operates online music and audio entertainment platforms primarily serving the Chinese market. The one-month return of Tencent Music Entertainment Group (NYSE:TME) was 9.65% while its shares traded between $7.66 and $21.55 over the last 52 weeks. On November 9th, 2026, Tencent Music Entertainment Group (NYSE:TME) stock closed at approximately $9.38 per share, with a market capitalization of about $15.20 billion.
Moon Capital Management stated the following regarding Tencent Music Entertainment Group (NYSE:TME) in its Q3 2026 investor letter:
"We believe the market is valuing TME as a declining music-streaming application when, in reality, it is a high-margin, subscription-driven entertainment platform with a dominant ecosystem, substantial financial assets, and a long runway for growth. The market's pessimism is understandable. Total monthly active users (MAUs) have declined, the company's legacy Social Entertainment business has contracted, and competitor Soda Music has grown rapidly. But we believe investors are focusing on the wrong metrics. A shrinking user base does not necessarily mean a declining business when the users who remain are becoming substantially more valuable. TME is shedding its least profitable users – casual listeners whose unit economics are vastly inferior to paying subscribers."
Since its December 2018 IPO, Tencent Music's paying music subscribers have increased from approximately 34 million to 127 million, while the share of users paying for subscriptions has risen from 6% to 24%. The fund also highlighted the company's improving music-related revenue, stronger content economics, and potential to unlock value through share repurchases. The chart on page 5 of the letter shows the paying-subscriber percentage increasing from 17.1% in 2023 to 24.0% in 2025 (Click Here To Read The Letter In Detail)."
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In another article, we covered Tencent Music Entertainment Group (NYSE:TME) and shared our thoughts on the company. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.
This article is originally published at Insider Monkey.
