By
Godfrey Benjamin
May 13th, 2024
Tencent Music announced that it will buy back Class A ordinary shares of up to $1 billion. The music streaming company further confirmed this could start as soon as March 29th and run for up to 12 months.
Tencent Music aims to start the new week on a high after a major plunge in its stock last week. Tencent Music lost a third of its value last week following a heavy sell-off of US-listed Chinese tech companies. In an aim to reassure investors, Tencent Music announced plans to conduct $1 billion share buyback. The share repurchase program will commence as early as Monday and as it is its biggest ever could go on for 12 months.
Board Chairman Tong Tao Sang in a statement noted:
“The share repurchase program is a strong indication of the board’s confidence in the company’s business outlook and long-term strategy, and we believe it will ultimately benefit TME and create value for its shareholders.”
Tencent Music is an arm of Tencent, it is a music streaming company listed on the New York Stock Exchange (NYSE). Like most other Chinese companies listed in the US, it was an unfortunate victim to massive sell-offs last week. This was triggered by the SEC introducing a new law that will force them to allow authorities to access their financial books or risk being delisted.
On Friday it was also reported that the likes of Morgan Stanley, and Goldman Sachs, took many of Archegos Capital Management’s China tech firms. They then liquidated stock worth over $10 billion. According to a CNBC informant, a lot of the trades were over the counter. hence no receipts were available in the public.
Tencent Music Second Listing after Its Share Buyback?
All this pressure meant that by the end of the week, Tencent Music had lost a third of its value. But now it looks like it’s aiming to come back swinging.
As we have reported, several Chinese companies are looking to ‘hedge’ amidst growing pressure in the US. Already, Baidu, Bilibili, JD.Com and Alibaba have successfully conducted the second listing in the Hong Kong stock exchange. This has been a form of adaptation for US-listed Chinese companies. And one that Tencent Music might have to result in if its stock continues to come under pressure.
So far, the company has not indicated any plans to debut in another exchange. In fact, with the buyback, the company looks like it plans to weather the storm. The repurchase program will see the company reinvest in itself and market shares reduce. If successful, the buyback is set to create demand and push prices.
As the leading music streaming platform in China, its outlook is secured in terms of revenue. But, the pressure upon it could ultimately push it to join the likes of Baidu and Alibaba by listing in Hong Kong.