On 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). That suspension won’t significantly hurt Tencent, since WeChat already serves 1.24 billion monthly active users (most of whom are in China). The vast majority of adults in China already use WeChat as an all-in-one app for payments, online purchases, food orders, ride hailing services, and more — so a brief suspension in “new” user registrations is fairly meaningless. China is also developing a national digital currency, the “digital yuan”, which could flow more freely across apps and payment platforms. China insists the digital yuan won’t ever replace WeChat Pay and Alipay, but its state-backed banks have already launched competing digital yuan wallets that could loosen Tencent and Ant’s iron grip on the mobile payments market.
Tencent Holdings LtdTCEHY:US
On an adjusted basis, which excludes its investments and other one-time items, Tencent’s net profit still fell 23% to 26.3 billion yuan ($4.1 billion). Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Patient investors with investing horizons of more than five years should consider buying some shares. Usually, shares of a company of Tencent’s caliber won’t come cheap. But this stock — still down by more than half from its 2021 peak — is currently trading at a reasonable valuation.
Its gaming business is still struggling
That could be challenging, especially as China’s regulators closely monitor new video game approvals and the playtime habits of minors. On the bright side, its advertising revenue rose 16% sequentially. Its domestic gaming revenue fell 7% year over year, representing its third consecutive quarter of shrinking revenue, as it grappled with tighter playtime restrictions for minors in China over the past year.
2010: Founding and growth
Domestic games, which include its blockbuster game Honor of Kings, accounted for 73% of that total. The remaining 27% came from overseas hits like League of Legends, Valorant, and PUBG Mobile. The merger would have created a great promotional platform for its top games and expanded its streaming video presence beyond Tencent Video.
Regulatory pressure on WeChat Pay
Chinese stocks surged on Tuesday amid reports of mooted stimulus plans and a sign that tough draft tech rules could be eased. Chinese internet giant Tencent on Wednesday posted its lowest annual profit since 2019, despite slight improvements recently in China’s economy and a more lenient attitude taken by regulators towards … Toyota Motor will partner with tech giant Tencent in China, it said on Thursday, as it looks to expand its position in the competitive auto market. According to one analyst, the rating for TCEHY stock is “Buy” and the 12-month stock price forecast is $46.0.
Tencent had been a hallmark of consistent and sustainable growth, with an unbroken track record of growth since it went public in 2004. So when the tech company reported that its revenue and operating profit fell by 1% and 13%, respectively, in 2022, investors would have found it difficult to swallow. Shares of Tencent Holdings Ltd. saw their biggest one-day gain in nearly a year on news the Chinese tech giant plans an earlier release of a hotly anticipated mobile video game. In May, Reuters claimed Tencent was still in talks with CFIUS to retain those investments.
In late July, Tencent abruptly suspended new user registrations for WeChat, the most popular mobile messaging and Mini Programs platform in China, “to align with relevant laws and regulations.” It’s understandable that U.S. investors would be wary of Chinese stocks. However, for those comfortable taking on that geopolitical risk in parts of their portfolios, many high-quality Chinese names look like bargains now, especially compared to their U.S. counterparts. Souring U.S. relations, government heavy-handedness, and a stalling economy have sent Chinese stocks down to bargain-basement valuations. Tencent’s largest shareholder is Prosus (majority owned by Naspers), which owns 25.6% of all shares[286][2] and hence is the controlling shareholder.[287] However, Ma Huateng, co-founder of Tencent, still owns a significant stake (8.42%).
The Motley Fool has positions in and recommends JD.com and Tencent Holdings. Upgrade to MarketBeat All Access to add more stocks to your watchlist. 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.
After the announcement, Tencent received a positive analyst note. Jefferies analyst Thomas Chong said the launch could help turn around Tencent’s domestic games revenue, which was down 3% last quarter. Chong also noted Tencent has other emerging franchises that should spur growth as well, as China’s regulators appear to be taking a more lenient attitude toward game approvals in 2024. Chong also named Tencent as his top pick in his coverage universe.
Meanwhile, its statement about Tencent Cloud suggests it might be giving up on chasing its two larger rivals — Alibaba Cloud and Huawei Cloud — in China’s cloud infrastructure race with unprofitable deals. The company attributed that slowdown to the resurgence of COVID-19 cases, which reduced its commercial payment volumes during the quarter, as well as its decision to pursue fewer “loss-making contracts” with Tencent Cloud. Stockholders of record on Monday, May 20th will be paid a dividend of $0.3839 per share on Monday, June 17th.
This is a boost from the stock’s previous annual dividend of $0.10. Tencent saw a decrease in short interest during the month of April. As of April 15th, there was short interest totaling 3,037,900 shares, a decrease of 20.8% from the March 31st total of 3,834,800 shares. Based on an average daily trading volume, of 4,390,400 shares, the days-to-cover ratio is currently 0.7 days. Click the link below and we’ll send you MarketBeat’s guide to pot stock investing and which pot companies show the most promise.
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. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
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…
This segment’s revenue rose 4% year over year during the quarter and accelerated from its 1% growth in the second quarter. Tencent mainly attributed that recovery to an acceleration in both “online and offline commercial payment activities,” and noted that it was scaling back some of Tencent Cloud’s unprofitable services to strengthen its margins. 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…
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- Usually, shares of a company of Tencent’s caliber won’t come cheap.
- In May, Reuters claimed Tencent was still in talks with CFIUS to retain those investments.
- It’s unclear if China will crack down on its top gaming companies again, but the Xinhua article likely spooked investors, since Tencent generated nearly a third of its revenue from video games last quarter.
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. Tencent’s 2022 results might have disappointed its longtime shareholders, but make no mistake. 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.
Those fines are light, but they could prevent Tencent from expanding its sprawling ecosystem of games, ads, social networks, cloud services, mobile apps, and streaming services in the future. Another option Chinese tech stocks are pursuing is slowing growth, but focusing their business and expanding margins while returning cash to shareholders. Tencent and JD.com appear to be doing this, with Tencent raising its dividend by 42% recently while more than doubling its share repurchases.
Unfortunately, political risks are unavoidable when investing in Chinese companies. Like most Chinese stocks, Tencent Holdings (TCEHY 2.19%) has been on a rough ride in recent years. After its share price reached an all-time high of nearly $100 in 2021, it lost almost three-quarters of its value, and it’s still down by more than half. 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…
Those restrictions also coincided with a temporary suspension on new video game approvals in China, which started last July and ended this April. Tencent (TCEHY 2.19%) 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.
The synchronous rise in Chinese stocks followed a favorable regulatory development for private Chinese companies and stocks. In addition, Tencent announced the early release of a hit mobile game receiving lots of buzz. 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 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.
At the beginning of the year, I sold all my shares of Tencent because I believed it would be the next big antitrust target in China. I would be hesitant about buying this stock — or any other top-tier Chinese tech stock, for that matter — until all these uncertainties are resolved. Back in 2018, Tencent endured a nine-month freeze on new gaming approvals in China as the government reevaluated the industry’s standards. Since then, Tencent has repeatedly implemented tighter playtime restrictions for minors to remain in the government’s good graces. But the announcement still startled Tencent’s investors, since WeChat is the heart of its advertising businesses. In the unlikely event that WeChat is permanently banned, its ad revenue would plummet.
Simply put, we still can’t consider Tencent to be a bargain at 25 times forward earnings. Alibaba, which arguably has a clearer path toward a long-term recovery than Tencent, trades at just 10 times forward earnings. So for now, investors should avoid Tencent (and most other Chinese tech stocks) and stick with more promising plays to navigate this challenging market. Tencent Holdings Ltd. shares staged their biggest rally since December after China’s biggest internet firm nailed down an earlier-than-anticipated debut of one of the year’s most eagerly-awaited mobile games. As of writing, Tencent’s stock has a price-to-earnings ratio of 16.
Within that total, its domestic gaming revenue fell 1% to 33.0 billion yuan as the “direct and indirect effects” of the Chinese government’s tighter playtime restrictions for minors reduced its number of active and paying users. Its international gaming revenue rose 4% to 10.6 billion yuan, driven by the growth of Valorant and Clash of Clans, but that growth was partly offset by the decelerating growth of its hit battle-royale game PUBG Mobile in a post-lockdown world. 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, 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… It’s unclear if China will crack down on its top gaming companies again, but the Xinhua article likely spooked investors, since Tencent generated nearly a third of its revenue from video games last quarter. Fresh competition in the fintech market would throttle the growth of Tencent’s rapidly growing fintech and business services division, which grew significantly faster than its VAS (value-added services) and online advertising segments last quarter.
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… Tencent Holdings reported worse-than-expected results in the fourth quarter as the Chinese technology giant navigated a slowing economy. Chinese tech giant Tencent Holdings said on Monday that it will release its much-anticipated “Dungeon https://broker-review.org/beaxy-exchange/ and Fighter” mobile game on May 21 after seven years of development. The Motley Fool owns shares of and recommends Activision Blizzard, Alibaba Group Holding Ltd., and Tencent Holdings. Chinese authorities are looking for ways to reattract foreign investment, and cheap Chinese stocks responded accordingly. Tencent’s net profit declined 51% to 23.4 billion yuan ($3.7 billion), which also missed analysts’ expectations by 5.1 billion yuan.
On July 24, the SAMR forced Tencent Music (TME 1.58%), which controls over 80% of China’s streaming music market, to give up all of its exclusive music licensing rights. Tencent spun off Tencent Music in an IPO in late 2018, but it remains the company’s biggest stakeholder. In late April, Reuters claimed the SAMR was getting ready to fine Tencent $1.54 billion. The government hasn’t dropped that hammer yet, but it’s issued Tencent several smaller fines of 500,000 yuan ($77,400) apiece for previously unapproved investments and acquisitions. Billy Duberstein has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JD.com, Jefferies Financial Group, and Tencent.
There are currently 1 hold rating and 1 buy rating for the stock. The consensus among Wall Street research analysts is that investors should “moderate buy” TCEHY shares. Moreover, https://forexbroker-listing.com/ buying the stock at its current valuation poses no significant risk of permanent capital loss. On a slightly positive note, Tencent has somewhat recovered from its 2022 woes.
With that context, any gesture on the part of government officials seen as market-friendly or encouraging foreign capital flows has the potential to light a fire under these cheap stocks. WeChat Pay might recover quickly after the new lockdowns end, since it already holds a new duopoly in digital payments with Ant Group’s Alipay (Ant Group is a close affiliate of Alibaba Group Holding (BABA 0.59%)). However, WeChat and Alipay could still face unpredictable regulatory headwinds in the future as China passes new laws for its leading fintech companies. Tencent is barely growing, yet its stock still trades at 20 times next year’s earnings. Therefore, I can’t consider it a value play — or an attractive investment at all — when so many other high-growth stocks are still on sale. Tencent set a May 21 start date for Nexon Co.’s Dungeon & Fighter Mobile for China — a marquee title expected to refresh an ageing pipeline, draw in new users and reaffirm Beijing’s easing stance for the world’s largest gaming market.
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. Besides, in the name of common prosperity, the government has indirectly extracted roboforex scam or legit 100 billion yuan (about $15.5 billion) from Tencent. While the Chinese government’s new direction will not directly weaken Tencent’s competitive advantage (more on this later), it certainly puts its future profitability at risk.
That uncertainty is troubling, since divesting those stakes would cut off Tencent’s access to Riot’s League of Legends, Epic’s Fortnite, and Activision’s Call of Duty Mobile, which are all core growth engines of its gaming business. Last September, the Committee on Foreign Investment in the United States (CFIUS) started probing Tencent’s investments in American gaming companies — including all of Riot Games, a 40% stake in Epic Games, and 5% of Activision Blizzard — over national security concerns. In addition to the across-the-board good news on China stocks, Tencent also had some notable company-specific news. It announced it would be releasing the mobile version of the hit game “Dungeon & Fighter Mobile” (DnF) earlier than scheduled on May 21, after a very positive response to its beta test. Outside of companies subsidiary of its game division, Tencent as a whole has many major and minor investments in domestic and, since the 2010s, foreign game companies.
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. Its social networking revenue rose 1% to 29.1 billion as the growth of its video-related subscription and live-streaming services barely offset the declining revenue at its streaming music and game streaming services. Last October, Tencent announced it would merge Huya (HUYA -0.68%) and DouYu (DOYU 1.66%), China’s two largest video game streaming platforms, to create a new platform with nearly 300 million monthly active mobile users. The Shenzhen-based social media and entertainment conglomerate also controls another 16% stake in Nio’s ADSs through three of its units.
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. Tencent’s revenue from its value-added services (VAS) — which include its domestic video games, international video games, and non-advertising social and streaming media services — rose just 0.4% year over year to 72.7 billion yuan ($10.9 billion) during the first quarter. 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. As a result, Tencent’s total VAS (value-added service) revenue — which includes its gaming divisions, social media platforms, and streaming media subscriptions — declined by 3% in the third quarter but still accounted for more than half of its top line. This core business might gradually stabilize as Tencent expands its international gaming business, but it will likely remain under intense pressure as long as the Chinese government continues to scrutinize the gaming industry.
