Tencent Music Entertainment Group (TME) saw its stock price surge 9.94% in pre-market trading on Wednesday, following the release of impressive first-quarter 2025 financial results and positive analyst reactions. The Chinese music streaming giant's strong performance in its online music subscription business and improved profitability metrics have sparked investor optimism.

TME reported solid growth in key areas for Q1 2025, with revenues reaching $1.01 billion, representing an 8.7% year-over-year increase. The company's music subscription revenue jumped 16.6% year-over-year to $581 million, while the number of paying users for online music grew by 8.3% to 122.9 million. Notably, Tencent Music's gross margin expanded to 44.1% from 40.9% in the previous year, driven by strong revenue growth from music subscriptions and advertising services.

The positive financial results have led to analyst upgrades and increased target prices. Bernstein raised its target price for TME to $15.5 from $15, while CMB International Securities maintained a Buy rating on the stock. Investors are particularly encouraged by Tencent Music's focus on long-form audio content, especially through its Super VIP (SVIP) program, which has been highlighted as a key factor in driving subscriber growth and engagement. With a solid start to the year and a positive outlook, Tencent Music appears well-positioned for sustained growth in 2025 and beyond, contributing to the significant stock price surge in pre-market trading.