Over the past year, TCEHY stock is down 41% while SE stock is down 56%, despite being up over 40% at one point. This signaled Beijing’s intention to continue protecting the interest of foreign investors. I’m not saying they are altruistic, but it shows they want to attract overseas funding and https://www.dowjonesrisk.com/ are savvy (or shrewd, if you prefer) enough to keep investors happy. According to Seeking Alpha’s quant rating, TCEHY is currently a ‘hold’ with a score of 2.87. This isn’t a good sign but looking at the factor grades contributing to the scoring, TCEHY stock has improved from three months ago.
To date, games remain Tencent’s primary monetization model–as we estimate more than 40% of the group’s operating income comes from this segment. Tencent should continue to leverage its unrivaled access to user data and financial capital to create innovative, high-quality, and long-cycle games with a mobile-first approach. Given enough time, revenue growth will prove more important to stock returns than multiple expansion, and companies in both the east and west appear well positioned to further grow revenue. For this reason, I want diversified exposure to compelling growth opportunities in both markets. 3 Wall Street research analysts have issued “buy,” “hold,” and “sell” ratings for Tencent in the last year. The consensus among Wall Street research analysts is that investors should “moderate buy” TCEHY shares.
- Jobs could be quietly added subsequently and outsiders would be none the wiser.
- If Tencent operated in the USA, it would pretty much be a no brainer buy, especially at its current price.
- Evaluating whether Tencent is a good stock to buy, sell, or hold, we need to look at both sides of the developments.
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So there could certainly be further to fall for Tencent too, which is why it’s important to dollar cost average and maintain a diversified portfolio. But I expect that over the long run, Tencent will recover to new highs. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. One was that the company had become gigantic, generating 555 billion yuan ($79.6 billion) in revenue in 2022. It is quite natural for a company of that size to find it challenging to sustain high growth rates.
Tencent: An Overview Of Its Investment Portfolio And Businesses
And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. Chinese stocks surged on Tuesday amid reports of mooted stimulus plans and a sign that tough draft tech rules could be eased. As the S&P 500 hits new highs, Chinese stocks are closing in on lows reached more than a decade ago. According to one analyst, the rating for TCEHY stock is “Buy” and the 12-month stock price forecast is $46.0.
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. Patient investors with investing horizons of more than five years should consider buying some shares. In other words, Tencent has twin engines of internal business and external investments to keep its growth machine humming. On a slightly positive note, Tencent has somewhat recovered from its 2022 woes.
SHANGHAI, Dec 27 (Reuters) – China’s Tencent Holdings (0700.HK) saw its shares stage a partial rebound on Wednesday, the first day of trade after authorities vowed to make improvements to proposed rul… Videogame maker Riot Games on Monday said it would lay off around 530 employees globally, or around 11% of its total staff, as it tries to narrow its focus after making what executives said were sever… Riot said it’s cutting headcount for Legends of Runeterra and giving up on an initiative to publish games from indie developers. Shawn Yang of Arete Research says that Baidu is “still doing better” than Alibaba or Tencent when it comes to AI development.
Tencent Holdings Ltd 00700
All told, Tencent is a highly diversified company that provides many FAAMG-like services to Chinese and global users. Besides, that existing metric doesn’t consider the value of the vast investment portfolio ($117 billion ) the company owns. Adjusting for these investments would result in an even lower price-to-earnings ratio. Even if this does not materialize, the compression of Tencent’s valuation multiples has made the stock attractive.
Looking at a historical chart of SPY or EEM, every dip seems like a great buying opportunity. But at the time of the dip, there was always a reason why there could be further to fall, and very few people timed the bottom of the dip perfectly. Upgrade to MarketBeat All Access to add more stocks to your watchlist.
NetEase loses a quarter of its value and Tencent stock skids on new China gaming rule proposal
The gaming unit of Tencent Holdings is well poised to benefit from the population stuck at home. However, with reduced business activities on closures, Tencent is seeing curtailed transactions on its payment app and will likely report lower advertising spending – a major contributor to its revenue – for the past weeks. With the Chinese internet companies operating under a harsher regulatory environment and fear mongers having a field day on what the U.S. government officials can do in their eagerness to ‘contain China’, related stocks continued to decline. The pressures from both Beijing and Washington even led to various quarters calling Chinese stocks “uninvestable”. A series of regulatory tightening moves thereafter reinforced the thinking and the decimation of the for-profit after-school tutoring industry virtually overnight in late July 2021 led investors’ fear of Beijing’s resolve reaching the zenith. Outside of China, delisting concerns due to the Holding Foreign Companies Accountable Act [HFCAA] and trumped-up allegations that the Chinese government was planning to repudiate Variable Interest Entities [VIEs] exacerbated the bearish sentiment.
There were speculations that the layoff announcements were made to extract concessions from Beijing or simply to signal to the regulators that they should back down on their scrutiny. Naysayers may pick on the fact that Tencent’s offerings weren’t on the initial batch of approved games. However, it should be highlighted that in late 2018 when China resumed the games approval following a hiatus then, Tencent was also missing from the initial batches. Yet, the company went on to receive dozens of game approvals in the following two years. That supported TCEHY stock to resume its uptrend and it hit a record high in early 2021. Indeed, Tencent Holdings’ PE ratio has fallen to a decade low of 13.0 times.
Readers may have noticed in my earlier chart that a descending triangle pattern fitted the prevailing share price movement of TCEHY stock. Contrary to the bullish ascending triangle pattern, the descending triangle pattern is a bearish one. The last time something similar developed was May-July 2021 and the share price of TCEHY took a big tumble down thereafter. 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… 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… Besides, in the name of common prosperity, the government has indirectly extracted 100 billion yuan (about $15.5 billion) from Tencent.
PUMA and Tencent Forge Partnership to Pioneer an Innovative Comprehensive E-commerce Business Model
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. Unfortunately, political risks are unavoidable when investing in Chinese companies. 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. Like most Chinese stocks, Tencent Holdings (TCEHY -1.15%) 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.
Their ownership of Supercell and Riot Games also gives them exposure to Clash Royale (#1 strategy), Clash of Clans (#5 strategy), and League of Legends (#28 strategy). Tencent has also partnered with Nintendo to distribute Nintendo’s console and games within China. International gaming revenue now represents 25% of Tencent’s online games revenue and it’s growing faster than domestic games revenue. As of February 29th, there was short interest totaling 3,119,400 shares, a decline of 26.7% from the February 14th total of 4,257,300 shares.
