---
title: "UBS lowers Tencent Music's target price to $26, expects non-subscription business to pressure profit margins"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/265639097.md"
description: "UBS has lowered the target price for Tencent Music to $26, expecting that non-subscription business will put pressure on profit margins. Although the revenue and earnings performance in the third quarter exceeded expectations, with strong non-subscription business and steady growth in subscription business, it is anticipated that the growth rate of subscription revenue will slow down by 2026. UBS believes that Tencent Music's long-term potential remains solid, but it may face profit margin pressure in the short term"
datetime: "2025-11-13T04:12:25.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/265639097.md)
  - [en](https://longbridge.com/en/news/265639097.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/265639097.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/265639097.md) | [繁體中文](https://longbridge.com/zh-HK/news/265639097.md)


# UBS lowers Tencent Music's target price to $26, expects non-subscription business to pressure profit margins

UBS research report indicates that Tencent Music (01698.HK) performed better than expected in terms of revenue and profit in the third quarter, with non-subscription business continuing to be strong and subscription business developing in an orderly manner. Looking ahead, the bank expects music subscription revenue to remain robust in the fourth quarter, growing 16% year-on-year, driven by a net increase of 1.3 million users and an average revenue per paying user (ARPPU) of RMB 12.2, but may slow to low double-digit growth by 2026 due to a higher base.

However, this slowdown may be offset by accelerated growth in non-subscription music revenue, such as advertising, offline concerts, and artist merchandise; it is expected that non-subscription music business growth will surpass subscription business growth by 2026, but it may put pressure on profit margins, coupled with increased personnel and marketing expenses to support new businesses and content.

The bank believes that Tencent Music, with its diversified business portfolio and solid market leadership position, still has strong long-term potential, but may face short-term pressure due to profit margin headwinds; it has raised revenue forecasts for the fourth quarter of 2025 and 2026 by 0.9% and 1%, respectively, expecting revenue and non-GAAP net profit to increase by 12.7% and 12% year-on-year in 2026; the target price for U.S. stocks (TME.US) has been lowered from $30 to $26, maintaining a "Buy" rating. (ss/)

### Related Stocks

- [Tencent Music Entertainment Group (TME.US)](https://longbridge.com/en/quote/TME.US.md)
- [TME-SW (01698.HK)](https://longbridge.com/en/quote/01698.HK.md)

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