Why Tencent Music Stock Turned It Up to 11 on Tuesday

Key Points

• The China-based company released its second-quarter earnings to a grateful market.

• It rewarded the music purveyor with a nearly 12% increase in share price.

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Investors were happy to crank Tencent Music (NYSE: TME) on Tuesday. Following the release of encouraging quarterly results by the China-based company, they sent its U.S.-traded American Depositary Shares nearly 12% higher in price on the day. That rate crushed the S&P 500 index's otherwise heartening 1.1% rise.

Music to the market's ears

In its second quarter, Tencent Music collected 8.44 billion yuan ($1.2 billion) in revenue, a strong (18%) year-over-year improvement for the company. The main driver of this growth was the take from online music services; this rose by 26% to 6.85 billion yuan ($953 million) for the period. Average revenue per user (ARPU) also headed north, rising to 11.7 yuan ($1.63) from 10.7 yuan ($1.49).

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Tencent Music's net income also saw a notable increase in volume. It climbed nearly 38% higher to just under 2.5 billion yuan ($348 million), for a per-ADS figure of 1.55 yuan ($0.22).

Both headline numbers beat the average analyst estimates. Pundits tracking the company's stock were anticipating it would earn 7.97 billion yuan ($1.1 billion) for revenue and a per-ADS net profit of 1.42 yuan ($0.20).

A one-stop shop for tunes, and fortunes

In its earnings release, Tencent Music quoted executive chairman Cuisson Pang: "As we continue to scale our platform, we are focused on building a vibrant, one-stop music service destination that empowers content creators and reshapes connections with music lovers in meaningful ways."

The company did not offer any guidance in its earnings release.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.