(Yicai) March 18 -- Shares of Tencent Music Entertainment Group plunged after the online music and audio platform reported slightly disappointing fourth-quarter earnings and said it will stop reporting some quarterly user metrics.

Tencent Music [HKG: 1698] closed down almost 22 percent at HKD44.72 (USD5.71) per share in Hong Kong today, extending the stock’s decline since the end of last year to 35 percent.

Net profit based on non-International Financial Reporting Standards rose 9 percent from a year earlier to CNY2.49 billion (USD363 million) in the three months ended Dec. 31, the Shenzhen-based company’s financial report showed late yesterday. Revenue climbed 16 percent to CNY8.64 billion (USD1.24 billion).

Profit fell short of an anticipated CNY2.53 billion, mainly due to interest income being lower than anticipated, according to investment bank China International Capital Corporation. 

The market had high expectations for emerging internet businesses such as Tencent Music, so the earnings report triggered a selling spree, an industry source said, adding that the decision to reveal less quarterly user data triggered concerns about transparency.

Tencent Music's previously strong growth led to relatively high market expectations for the fourth quarter, but its performance fell short of expectations, said Wu Lixian, an international strategist at Everbright Securities. 

While the company's fundamentals have been sound, Wu said, there are concerns about the impact of artificial intelligence on some software businesses listed in the United States and Hong Kong, which partly explains why Tencent Music's share price has underperformed recently. 

Another source of concern in Tencent Music’s report was that monthly active users of its online music service dropped 5 percent to 528 million in the quarter from a year ago, even though the average monthly revenue per paying user rose 7.2 percent to CNY11.9 (USD1.73). 

Tencent Music also said that it will cease to disclose quarterly user data such as the number of monthly active users of online music, the number of paying users, and the average monthly revenue per paying user. Instead, it will disclose the total number of paying users of music services at the end of the year. 

Tencent Music said the reason for this decision was that when it went public, it used the number of paying subscribers and the average monthly revenue per paying user as the key operating metrics for its online music service, but the company’s business model has undergone significant changes in recent years. 

As its advertising and other intellectual property-related businesses are expanding and it provides multi-tiered membership services for online music subscriptions, the contribution of each paying member to the overall business varies, so the company is focusing more on revenue and profit as core performance indicators, it said. 

Wu said that if the frequency of data disclosure is reduced, the market’s opportunity to assess the company’s daily operations will also decrease. A Guangzhou-based private equity investor also told Yicai that discontinuing quarterly user data reports may signal a decline in transparency.

Editor: Tom Litting