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Chinese Stocks To Watch: FB, GOOGL Peer Tencent Music Tunes Up New Breakout

Chinese Stocks To Watch: FB, GOOGL Peer Tencent Music Tunes Up New Breakout

As social media giants Facebook (FB) and Alphabet (GOOGL) show strength, industry peer Tencent Music Entertainment (TME) tunes up for a new breakout.




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Tencent Music Entertainment was established in 2016 when China-based Tencent (TCEHY) acquired China Music. Tencent Music had its IPO in December 2018, quickly becoming one of the leading Chinese stocks to watch.

TME stock sports a 95 Composite Rating, meaning it’s outperforming 95% of all stocks in terms of key out of the most important stock-picking criteria. FB stock (98) and GOOGL stock (97) earn even higher ratings. All three stocks are in the internet content group, which ranks a strong No. 13 among the 197 groups IBD tracks.

With a new buy point in sight, Tencent Music has just been added to the IBD Breakout Stocks Index.

Facebook is also entertaining a new breakout move, while GOOGL stock trades near the top of its buy zone.


See Who Joins TME Stock On The IBD Breakout Stocks Index


Chinese Stocks To Watch: Tencent Music Hits High Note In Q3

As China’s leading online music entertainment provider, Tencent Music operates the country’s popular music apps, QQ Music, Kugou Music, Kuwo Music and WeSing.

Taking a more melodic approach to social media than Facebook and Alphabet, Tencent Music’s platform comprises online music, online karaoke and music-centric livestreaming services. The technology enables music fans to discover, listen, sing, watch, perform and socialize around music.

In the third quarter, paying users for its online music services reached 51.7 million, a year-over-year increase of 46%.

Tencent Music’s latest report showed a nice rebound after declining earnings growth in Q1 and a flat Q2. Quarterly earnings jumped to a 20% EPS gain. Revenue growth accelerated for a second straight quarter, to 22%.

For the full year, analysts expect Tencent Music to post a 7% decline in earning growth, but look for a 31% gain in 2021.

TME Stock Joins FB, GOOGL Near Buy Zone

Tencent Music is working on a new consolidation after retaking its 10-week moving average. The buy point is 18.07. TME stock slipped just over 2% Tuesday in above-average volume.

Fellow Chinese stocks to watch JD.com (JD) and founding namesake Tencent are also testing their 10-week lines, trading right around buy zones. Alibaba (BABA) is struggling to retake that key benchmark.

The relative strength line for TME stock has slipped well below its prior high. Look for that to reverse course and head higher.

FB stock is perking up as it forms a cup with handle showing a 297.48 entry. GOOGL stock has been holding its gains from an earlier cup-with-handle breakout.

With social media stocks and fellow Chinese stocks to watch showing strength, see if Tencent Music can strike the right note and break out to a new high.

IBD Breakout Opportunities ETF

The IBD Breakout Opportunities ETF (BOUT) from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this allows you to essentially invest in the entire index in addition to or rather than buying individual stocks. Learn more about the ETF and Innovator funds.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.

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Erin Clark

Erin is a sports enthusiast who loves indulging in occasional football matches. She is a passionate journalist who flaunts a perfect hold over the English language. She currently caters her skills for the sports and health section of Report Door.

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