Tencent Music (NYSE:TME) shareholders outperformed the market by a wide margin last month. Shares soared 38% in January compared to a 1% downtick in the S&P 500, according to data provided by S&P Global Market Intelligence.
The rally added to significant short-term gains for the Chinese music streamer, which rose over 60% in 2020.
January's spike was supported by news that Tencent is acquiring Lazy Audio, a major player in both music and long-form streaming content including audio books. Wall Street pros cheered the purchase news and responded by boosting their short-term price targets on the stock.
Tencent is likely to report strong growth in its next earnings report, slated for early March. The pandemic, plus a continuing to shift toward subscription-based music delivery, helped push its paying user base up 46% in the prior period that ended in late September. That success allowed sales to rise 16%, and investors are expecting accelerating growth in the fourth quarter as revenue jumps 24%.
Management is hoping to add to that momentum in 2021 with help from a growing content portfolio that now includes niches like audio books and video.