Tencent’s 2022 results might have disappointed its longtime shareholders, but make no mistake. 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. For example, its regulatory crackdowns on the online education and tech industries have severely impacted Tencent’s advertising and cloud income. In my previous article titled Is Alibaba Stock A Buy Or Sell After $25 Billion Buyback Announcement?
With 1.3 billion monthly active users (MAU), its user base includes almost everyone in China. And they use it not only for communication but also to access services such as online payments, ride-sharing, public transportation, entertainment, online gaming, and more. In a way, it’s almost impossible for an average Chinese citizen to live in China without using WeChat and its ecosystem of services. The Company provides services including social network, music, gateway websites, e-commerce, mobile gaming, payment system, entertainment, artificial intelligence and technology solutions through its subsidiaries. Tencent (TCEHY, 0700.HK) — the parent company of social media app TikTok — shares are trading higher after announcing layoffs at video game developer Riot Games, joining the ranks of companies rolling…
On Friday, China’s central bank announced that it will lower banks’ reserve requirement ratio that determines the amount of deposits banks have to set aside. The move would release 530 billion yuan ($83 billion) of liquidity to spur lending and help businesses. Institutional investors could be comforted by Tencent Holdings Ltd’s solid free cash flow of $17.5 billion and an FCF yield of 3.9%. This is impressive when compared with Sea Limited (SE), affectionately named the Tencent of Southeast Asia and “Baby Tencent” by some market players. There is always the possibility that the government may want more control over internet businesses by curbing monetization, limiting collection of user data, or restricting acquisitions. China’s proposed gaming rules would hit smaller developers more than large ones, while also reducing overall online advertising revenue, according to UBS.
Thus, it isn’t unfair that TCEHY is suffering from the same bearish sentiment ailing the sector. TikTok owner ByteDance said on Tuesday it is in talks with multiple prospective buyers of its gaming assets, including the world’s largest video games company, Tencent , as the Chinese social media fi… If Tencent operated in the USA, it would pretty much be a no brainer buy, especially at its current price. The company’s revenue is arguably more diversified but as fast growing as the tech giants in the USA, and its investment portfolio is one of the largest in the world. Aside from deriving less revenue from advertising, an important difference between Tencent’s platforms and western social media like Facebook is that Tencent basically created an operating system within its social network apps.
TCEHY Stock News Headlines
Click the link below and we’ll send you MarketBeat’s guide to investing in 5G and which 5G stocks show the most promise. If that’s not enough, Tencent has proven to be an excellent tech investor, having bought stakes early on in what have become some of the region’s most prominent companies. Hence, summing up all the positive catalysts mentioned in this article, I rate Tencent a good stock to buy. Evaluating whether Tencent is a good stock to buy, sell, or hold, we need to look at both sides of the developments. Earlier in this article, I mentioned the Chinese economy is struggling with the country’s worst Covid-19 outbreak since 2020, inevitably dragging down TCEHY stock in the near term.
- This signaled Beijing’s intention to continue protecting the interest of foreign investors.
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- Fortunately, it is the only game in town, and it could keep that position for a while.
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- On a slightly positive note, Tencent has somewhat recovered from its 2022 woes.
With the suspension of new games approval lifted, it is a matter of time before we see Tencent’s titles getting approved. Every game title of Tencent being approved would be a share price upside driver for TCEHY. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. 2022 was anticipated to be the recovery year and through mid-February, TCEHY stock established an ascending triangle pattern which is recognized in technical analysis as a bullish chart pattern.
What Is Tencent Stock’s Outlook?
After the wallop following the suspension of Ant Group’s IPO, BABA stock began to slide and has since lost nearly all the gains post-IPO. At their respective peaks, BABA stock hit a total return of 238% while TCEHY doubled the feat, achieving a 541% total return. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams.
Based on an average daily volume of 5,650,200 shares, the short-interest ratio is presently 0.6 days. With its dominant market position, Tencent has plenty of opportunities to profit from its captive users. To keep making money from its ecosystem, all it has to do is ensure that it remains the preferred communication platform in China. Fortunately, it is the only game in town, and it could keep that position for a while.
The Chinese government has ousted a top official in charge of regulating the country’s gaming industry, according to reports, in a likely effort to stem the damage from a stock market rout over propos… Tencent Holdings’ Riot Games plans to lay off 530 employees, or about 11% of staff globally, the online gaming company said on Monday in a blog that included a letter to staff from CEO Dylan Jadeja. 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… 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. Tencent halted the development of a highly anticipated mobile game based on Square Enix’s “Nier” franchise in December, according to three people with knowledge of the matter, marking a setback in the… China’s central bank has approved Tencent Holdings’ online payment platform Tenpay boosting its registered capital to 15.3 billion yuan ($2.13 billion), according to a central bank statement on Friday…
Key competitors to Baidu’s cloud business are not Alibaba or Tencent: Analyst
ByteDance’s TikTok is China’s most successful international social media platform. However, Washington has recognized its popularity and the danger it poses – i.e., TikTok displacing Facebook as the global dominant social media platform would diminish the ability of the U.S. to control the Western narrative. Former President Trump’s attempts to bring down TikTok must have highlighted to Beijing the importance of having more alternatives. Regarding the bearish reports like “large-scale layoffs” happening at Chinese tech giants, we may have forgotten that such moves announced to placate shareholders on management’s cost-cutting endeavors are common in the U.S. as well. Jobs could be quietly added subsequently and outsiders would be none the wiser.
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. Tencent’s clever use of its social media platform and intellectual property allows it to share its moat with some of its investments, which dramatically boosts the chance that they will succeed. It’s also very likely that Tencent uses data about which WeChat and cloud apps are gaining popularity to choose which companies to invest in, a huge advantage over most other retail – or institutional – investors. On advertising, Tencent is expecting a growth recovery in late 2022 while new game releases would juice revenues from this year. Its cloud and long-form video businesses are expected to improve on profitability as the company reduces expenses on items like marketing.
The push for Chinese alternatives provides Tencent offerings with a good shot at global monetization
Unfortunately, the share price took a turn for the worse and plunged to levels not seen since late 2019, effectively giving up more than two years of gains. Over the past decade, Tencent has capitalized on the industry shift toward mobile gaming. The firm owns some of the world’s most popular titles, like Honor of Kings and PUBG Mobile.
Based on the latest recommendation compilation for March, of the 37 calls, 13 are ‘Strong Buy’, 23 are ‘Buy’, and only 1 ‘Hold’, with no one saying ‘Underperform’ or ‘Sell’, giving it a high rating of 1.8. Compared with February, there are two more ‘Strong Buy’ calls in March. It can be argued that the various challenges faced by Tencent may have crimped its profit outlook and its valuation multiples. With TCEHY’s outperformance over BABA stock, it is no wonder that some of my friends questioned if Tencent stock is overvalued. The discussion may seem odd considering the big cut in the market cap of Tencent from its peak already. We’d like to share more about how we work and what drives our day-to-day business.
It delivered respectable first-quarter 2023 results, with revenue and operating profit up by 11% and 9%, so the worst is probably over for the company. I recently watched a Chinese talk show helmed by prominent academia, Dean of the China Research Institute of Fudan University, Professor Zhang Weiwei, who together with guest speaker Professor Jin Canrong, discussed the Russia-Ukraine war. Professor Jin is the Deputy Dean, School of International Relations, and Deputy Director, Center https://www.tradebot.online/ for American Studies, of the Renmin University of China. During the question-and-answer section of the show, the duo emphasized the need for the Chinese population to be able to effectively challenge the narrative propagated by Western countries which has been facilitated by international platforms. Considering the message here and from other Chinese expert commentaries I came across, there seems to be a recognition that China needs its platforms to be adopted internationally.
I pointed out that non-Chinese companies are increasingly targeted by foreign governments, even as the governments where the companies are based are themselves looking at ways to rein in the tech players. However, a whopping 1043 institutional investors have other thoughts. 24% of Tencent shares are owned by institutional investors, representing 38% of the float. Growth deteriorated two notches to D from C+ but Valuation inched up from D- to D and Revisions jumped from F to D+.
After a year of downdraft in TCEHY amid a multitude of bearish issues, it probably doesn’t take much for the market to be excited and once the positive momentum gets going, fear of missing out [FOMO] could quickly propel the stock higher. Bystanders regretting not getting on board the bargain boat could eventually give in and feed the momentum. This Baby Tencent that received loads of love from growth investors brought ecstasy and then misery as SE stock outperformed Tencent for much of 2021, but subsequently gave up all the superior returns and more when reality trumped ambitions.
