While, Japanese investment firm Nomura in its Tencent share price forecast cut its target price from HKD420 to HKD398 following its third quarter earnings. Those divestments could also boost Tencent’s profits even as its revenue growth stalls out. But for now, analysts still expect Tencent’s revenue and net income to decline by 1% and 55%, respectively, for the full year. Its growth might accelerate in 2023 if its domestic gaming and advertising business stabilize, but I think those are still tall orders in this tough market. On the bright side, its advertising revenue rose 16% sequentially.
- Like most Chinese stocks, Tencent Holdings (TCEHY -1.87%) has been on a rough ride in recent years.
- Riot Games, the developer of the popular “League of Legends” multiplayer battle game, is joining other tech companies that have been trimming their payrolls with a layoff of 11% of its staff.
- Always conduct your own due diligence, looking at the latest stock news, a wide range of analyst commentary, technical and fundamental analysis.
- Beijing has quietly pulled the proposed curbs on the video game industry from the official website, weeks after the draft guidelines wiped tens of billions of dollars off the market value of local tit…
However, on 1 November, Dutch investment group Prosus clarified the speculation and said that it had only sold “small numbers of ordinary shares in Tencent” to fund its share repurchase programme. Tencent Holdings’ stock has experienced wild swings in recent years, marked by record highs and multi-year lows. Domestic regulatory developments and engulfing candle strategy Sino-US relationship concerns have emerged as key risks for Tencent shareholders. As of 7 December, Tencent had a market capitalisation of HKD3.03trn ($3.9bn), making it the most valuable company listed in Hong Kong. It did not help that one of the central themes from Tencent throughout 2022 was about improving efficiency and controlling costs.
That’s all speculation for now, but Ant Group (which owns WeChat Pay’s closest competitor, Alipay) was also probed by regulators and forced to restructure its business as a financial holding company last year. Tencent’s net profit rose 60% to 94.96 billion yuan ($14.9 billion), but that was mainly driven by a massive sale of JD.com (JD -3.32%) shares last December. Excluding that gain and other one-time benefits, Tencent’s adjusted net profit declined 25% to 24.88 billion yuan ($3.9 billion).
As the S&P 500 hits new highs, Chinese stocks are closing in on lows reached more than a decade ago. Riot Games is laying off about 530 employees, which represents 11% of its workforce, the Tencent-owned company announced on Monday. The League of Legends maker is also sunsetting its five-year-old pub… I like that the management team is addressing its challenges head-on.
That stabilization should allay some near-term fears regarding the segment, which was initially expanded through a restructuring four years ago to reduce the company’s dependence on video games. However, this business could also be targeted by regulators soon. The government has reportedly been probing the use of WeChat Pay in money-laundering schemes, and it might be pressured to spin off the fintech business into a holding company where it can be tightly regulated. But the bigger culprits were external factors such as China’s economic weakness, which was caused in part by that nation’s extended and strict COVID lockdowns. Other Chinese government policies also hurt Tencent’s financials in 2022.
PUMA and Tencent Forge Partnership to Pioneer an Innovative Comprehensive E-commerce Business Model
And a share-swap in 2017 saw it take a 7.5% stake in streaming giant Spotify (Spotify got 9.5% of TME in return, reported Tech Crunch at the time). It owns a 40% stake in Fortnite studio, Epic games, and has the license to PlayerUnknown’s Battlegrounds (PubG) – although it failed in its own battle to get the game approved for distribution in China. Moreover, buying the stock at its current valuation poses no significant risk of permanent capital loss.
Tencent’s listed portfolio was worth around $95 billion (excluding subsidiaries and private holdings), which is pretty significant given that the company’s market value is less than $380 billion as of writing. Besides, investors who wanted to avoid tech stocks would likely stay away from the company. Furthermore, the advertising industry in China saw a slowdown after tutoring firms were forced to go non-profit and were barred from listing on the stock market.
China’s proposed gaming rules would hit smaller developers more than large ones, while also reducing overall online advertising revenue, according to UBS. China’s gaming regulator has removed from its website rules it proposed last month aimed at curbing spending and rewards that encourage playing video games, checks by Reuters on Tuesday showed, in a m… The second quarter saw revenue fall 3% year-over-year (YOY) due to a slump in online advertising earnings.
Alibaba and Tencent Expand in China with Strategic Land Purchases, Bet on Tech Sector’s Recovery
Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People’s Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People’s Republic of China.
With the uncertain nature of Chinese government regulations, a long-term outlook is nearly impossible to measure. So unless Tencent reports significant positive news, like a massive turnaround in its financial performance, the pessimism could linger for a while. Confused (and frustrated) investors — especially foreign investors — want to know what caused the share price to plummet. Though we cannot pinpoint the exact reason, we can certainly make some educated guesses.
Meta reportedly will team with Tencent to sell new VR headset in China
As Tencent’s revenue growth stalls out, it’s divesting its non-core assets and reining in its operating expenses. That’s why it divested most of its stake in JD.com to its investors in the form of a special dividend earlier this year, and why it plans to do the same to its stake in the food delivery giant Meituan. That progress is encouraging, but Tencent’s overseas business could also face regulatory headwinds.
The former relies on its social media networking services (mainly WeChat and QQ) and 1.3 billion monthly active users (MAU). As the dominant messaging service in China, Tencent can leverage its user base to offer an ever-expanding catalog of services to improve monetization. It already provides services like payments, gaming, online video, e-commerce, and music and is well-positioned to add new products over time. Tencent generated 50% of its revenue from its value-added services (VAS) segment, which is split between its domestic video games, international video games, and nonadvertising social and streaming media services.
Tencent generated 15% of its revenue from its advertising business, which sells ads on its core social networking app WeChat (known as Weixin in China), its ad-supported streaming services, and other smaller apps. Tencent (TCEHY -1.87%) posted its third-quarter earnings report on Nov. 16. The Chinese tech giant’s revenue fell 2% year over year to 140.1 billion yuan ($19.7 billion), which represented its second consecutive quarter of declining revenue since its IPO in 2004. On https://g-markets.net/ an adjusted basis, which excludes its investments and other one-time items, its net profit grew 2% to 32.3 billion yuan ($4.5 billion). Pony Ma, chief executive and co-founder of Tencent Holdings , has said that the company’s video games business faces great challenges from competitors but is catching up in artificial intelligence (AI… One of the most substantial headwinds is Prosus’ (and its sister company Naspers) decision to gradually reduce their stakes in Tencent.
Since then, TCEHY stock has decreased by 0.8% and is now trading at $37.49. New Rank-Based ScoringMarketRank™ is calculated by averaging available category scores (with extra weight given to analysis and valuation), then ranking the company’s weighted average against that of other companies. Riot Games, the developer of the popular “League of Legends” multiplayer battle game, is joining other tech companies that have been trimming their payrolls with a layoff of 11% of its staff. Chinese stocks surged on Tuesday amid reports of mooted stimulus plans and a sign that tough draft tech rules could be eased.
It would be tedious to go through them all, but let’s take a quick look at some of them. Earning results for the first quarter of 2020 showed a total revenue of 108 billion Chinese yuan ($15.2 billion) – an increase of 26% year-on-year, despite the coronavirus pandemic. “It has a business model that other Chinese companies can only envy – it can reach an audience of, basically, everyone.” “Tencent is thought of as so much more than just a Chinese company in China – it has gained a reputation as a family-friendly organisation that connects families, friends and work colleagues in a digital age,” she said. Based in Shenzhen and founded in 1998, the Chinese company Tencent enjoys huge popularity – and profits – in China. Tencent’s recent business performance might not have been inspiring, but the issues that caused it difficulty are likely temporary.
