5 Reasons You Should Still Buy Tencent's Stock 1. The explosive growth of its gaming business. Tencent's online gaming revenue surged 45% year-over-year, marking an... 2. The expansion of its social media ecosystem. Tencent's WeChat (known as Weixin in China) ended the quarter with 1.21... 3. Robust ...
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Is now a good time to buy Tencent stock?
Tencent Holdings, largely unknown outside China, is the world’s largest gaming company. And last year, for the first time since its listing in 2004, its stock recorded its biggest yearly crash. But its shares have been on the rise in 2019, and with half-year results due on Wednesday, is now the time for investors to buy in?Founded in 1998, it has a market cap of about HK$3 trillion. It runs ...
Should I invest in Tencent?
Understanding the segments helps in identifying the importance of different factors that aid the market growth.
Is Tencent publicly traded?
While investors can't invest directly in Riot Games, they can purchase shares in Tencent, which is a publicly-traded company. The company, traded as TCEHY on the NYSE, has surged 85 percent in the...
Is an acquisition by Tencent good for supercell?
Tencent’s purchase of Supercell would surpass the previous record gaming acquisition in November, when Blizzard paid $5.9 billion for ‘Candy Crush Saga’ creator King Digital Entertainment. “Tencent has weaker research and development capability and such a deal could help enhance it,” said senior director of TrendForce Jeter Teo.
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Is it good to invest in Tencent stock?
Analysts expect Tencent's revenue to rise 13% in 2022, but for its net profit to decline 37% as it laps the JD divestment. In 2023, they expect its revenue and net income to rise 17% and 27%, respectively.
Is Tencent worth holding?
Tencent has one of the world's most lucrative Tech investment portfolios, with an incredible track record of success. The company holds 83 companies worth over $1 billion in its portfolio. The even more impressive thing is 52 of these companies are unicorns (private companies worth over $1 billion).
Why is Tencent stock so low?
Tencent's stock suffered a sharp drop after the company reported its slowest-ever growth due to a bruising crackdown by China on the country's tech sector. Shares in the Chinese social media and gaming giant tumbled around 6% in Hong Kong on Thursday after its US-listed shares closed 5.4% lower on Wall Street.
Why Tencent is a better buy than Alibaba?
Tencent has a more diverse business than Alibaba. Tencent's investment portfolio and international assets are more impressive. Tencent's management seems to have better relationships with regulators.
What is Tencent known for?
Tencent is a world-leading internet and technology company that develops innovative products and services to improve the quality of life of people around the world. Founded in 1998 with its headquarters in Shenzhen, China, Tencent's guiding principle is to use technology for good.
Who is the largest shareholder of Tencent?
Amsterdam-based Prosus is Tencent's biggest shareholder with a 28.8% stake worth about $128 billion. It's not the first time Prosus has sold Tencent shares in recent years.
Why are Chinese stocks crashing?
Chinese stocks were tumbling Monday, extending a selloff from last week amid pressures on multiple fronts, including Covid-19 lockdowns in China and regulatory threats on both sides of the Pacific. Shares in some of the country's largest companies saw stark declines.
How high does Tencent go?
Stock Price Forecast The 52 analysts offering 12-month price forecasts for Tencent Holdings Ltd have a median target of 57.36, with a high estimate of 76.45 and a low estimate of 37.72. The median estimate represents a +16.00% increase from the last price of 49.45.
What stocks does Tencent own?
It operates the instant messengers Tencent QQ and WeChat, and QQ.com. It also owns Tencent Music. The company surpassed a market value of US$500 billion in 2018, becoming the first Asian technology company to cross this valuation mark.
Who is bigger Tencent vs Alibaba?
For Alibaba, the company recorded revenue of RMB 841.9 billion (US$15.7 billion) in the last 12 months, a 13.7% growth from the 2020 fiscal year. Meanwhile, Tencent saw full-year 2020 revenue of RMB 482.1 billion which grew to RMB 549.6 billion in the last 12 months, a 14.0% growth.
Is Alibaba and Tencent the same?
Alibaba Group (BABA) and Tencent (TCEHY) are two of China's top tech companies. Alibaba is China's largest e-commerce and cloud services company, while Tencent is a market leader in the social networking, advertising, gaming, streaming media, cloud, and fintech markets.
Is Alibaba still popular in China?
At present, Alibaba remains the largest e-commerce retailer in China and the second-largest Chinese internet company by market capitalization after gaming giant Tencent. Alibaba's deep pockets are paramount to its future prospects, analysts say.
OTC: TCEHY
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Its past growth looks healthy, but its future looks murky
Tencent ( TCEHY -1.96% ) posted its second-quarter earnings on Wednesday. The Chinese tech giant's revenue rose 20% year over year to 138.3 billion yuan ($21.3 billion), meeting analysts' expectations but decelerating from its 25% growth in the first quarter.
1. The growth of its gaming business
Tencent is the largest video game publisher in the world. Its top games in China include Honor of Kings, Peacekeeper Elite, and Moonlight Blade Mobile, while its overseas hits include Clash of Clans, League of Legends, PUBG Mobile, and Call of Duty: Mobile.
OTC: TCEHY
Tencent also owns stakes in many game publishers, including Fortnite publisher Epic Games, Activision Blizzard, and Ubisoft. It's also Nintendo 's partner and distributor in China.
2. The growth of its advertising business
Tencent is one of the largest advertising companies in China. It sells ads on WeChat (known as Weixin in China), which serves 1.25 billion monthly active users as China's top mobile messaging and Mini Programs platform.
3. The growth of its fintech and business services unit
Tencent's fintech and business services unit -- which houses its payment platform WeChat Pay, Tencent Cloud, and other services -- grew its revenue by 40% year over year during the quarter and accounted for 30% of its top line. The segment's revenue rose 30% in the prior-year quarter.
The one reason to sell Tencent: China's crackdown
Tencent's core businesses are strong, but its recent regulatory challenges are overshadowing its strengths.
When did Tencent go public?
Tencent also entered into the MMORPG (Massively multiplayer online role-playing game) gaming space. Tencent went public in June 2004 by listing its shares on the Hong Kong Stock Exchange. In the same year, it launched QQ2004 with several improved features and utilities.
Where is Tencent located?
Tencent, an investment holding company based out of Shenzhen, China, was founded in 1998. It was the 1st Chinese internet company to be profitable and the 1st Asian company to exceed $500 billion in market cap.
When did Tencent start messaging?
Initially set up as a software company, Tencent launched the QQ instant messaging app for the eastern market in 1998. With the release of QQ 2000, the company forayed into e-commerce. After posting losses for 3 consecutive years, Tencent broke even in June 2001.
Is Tencent a Berkshire Hathaway?
Tencent Holding ( OTC: TCEHY) is a sprawling conglomerate that could be dubbed China’s Berkshire Hathaway. It has a number of diverse businesses under its fold, and it currently ranks among top companies in terms of global market capitalization. The Hong Kong-based company also has an OTC listing. It’s a technology and Internet services powerhouse ...
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Is Tencent a positive company?
The fundamental outlook for Tencent is positive. The WeChat social networking, which has over 1 billion users, is only in the early stages of monetization. And Tencent has also made inroads into some fast-growing areas such as video, cloud computing and artificial intelligence.
What games does Tencent own?
These games include PUBG Mobile, Valorant, Call of Duty Mobile, Honour of Kings, League of Legends, and others. Therefore, Tencent is strongly positioned in this industry.
What is Tencent's nickname?
Tencent is sometimes referred to as the Berkshire Hathaway ( BRK.B) of China. Although Tencent mainly invests in tech companies, it is somewhat of an appropriate nickname for it because like Berkshire, Tencent is a big conglomerate company. It has invested in over 800 companies and 160 of them are unicorns.
Is Tencent a big company?
Tencent is one of the biggest companies in the world. Yet, if you mention the name "Tencent" to any regular person not living in China, chances are likely that they'd never heard of it. It doesn't have the household name fame like Facebook, Inc. ( FB ), but it is just as high-quality of a company and almost as big.
Is Tencent a serial acquirer?
Tencent is a serial acquirer, but it acquires companies responsibly. Many acquisition-heavy companies take on loads of debt or do equity raises to fund acquisitions but TCEHY acquires within its means. This can be seen below as debt has never been a problem for the company since equity and cash grow in line with debt levels. Therefore, the company is in great financial shape and even claims to be net cash positive in its investor presentation.
What is Tencent doing in China?
Tencent is playing a big role in making both activities part of daily life in China, and that spells big growth potential for the company going forward.
Is Tencent a winner?
Tencent Holdings ( OTC:TCEHY) stock has been a big winner for shareholders, up 3,200% over the last 10 years. The Chinese tech giant has benefited from China's thirst for online entertainment in recent years, including social networks, gaming, streaming services, and cloud services. As a kicker, the company is also one of the largest mobile payment providers.
Is Tencent a mobile payment provider?
As a kicker, the company is also one of the largest mobile payment providers. Tencent is No. 1 in China based on active users across all of these areas, think of the company as a combination of Netflix, PayPal Holdings, Alphabet, Facebook, Spotify Technology, and video game maker Activision Blizzard, all wrapped up in one.
Does Tencent own Epic Games?
Tencent also has a minority stake in Epic Games, the maker of Fortnite -- the most popular game in the world right now -- which has grossed over $1 billion in revenue less than a year after its release, according to SuperData.
Summary
Tencent is growing fast and holds a great position in high-growth markets.
Article Thesis
Tencent ( OTCPK:TCEHY ), a high-growth mega-cap tech company from China, looks like a strong buy at current prices, due to a low valuation, a strong growth outlook, and an excellent market position.
1: Tencent Is Well-Positioned Across A Range Of Attractive Industries
Tencent is a tech company that is offering a wide range of services, products, and solutions to its customers and users. Its businesses are all active in high-growth markets, and Tencent usually holds the number 1 or number 2 position in its respective markets.
2: Strong Growth Rates, High Profitability, Compelling Growth Outlook
Tencent's strong position in a range of attractive growth markets goes hand in hand with the company's compelling growth track record. The company has managed to grow its business during every single quarter for years, not only on an annual basis but also sequentially:
3: Valuation That Leaves Significant Upside Potential
Tencent's shares are not ultra-cheap today, but that has to be expected from a high-growth tech company with a strong market position. The current valuation does, I believe, leave significant upside potential in both the near term as well as in the long run.
Takeaway
No investment is risk-free, and that certainly holds true for Tencent as well. But risks do not seem unbearably high to me, and Tencent could be a worthy addition to a diversified portfolio. The company is well-positioned to grow its business for many years, TCEHY is highly profitable, and last but not least, shares do not seem too expensive.
Why did Tencent sell off?
There are a number of reasons Tencent might have sold off on otherwise solid results. First, some investors anticipate fines from China's market regulator. The State Administration for Market Regulation (SAMR) passed stricter anti-monopoly laws in February.
Is Tencent a good company in 2021?
In the first quarter of 2021, Tencent reported good revenue and profit growth. While some may quibble with a deceleration in its core online games business and slight margin compression, the company turned in an otherwise solid quarter:
Will Tencent lower its margin in 2021?
Second, Tencent also said it would be stepping up its investments in a big way this year, which will lower its margin in 2021. Although operating profit will likely still grow, that growth will be somewhere between flat growth and the 22% growth logged last quarter, according to management.
The Growth of Its Gaming Business
The Growth of Its Advertising Business
- Tencent is one of the largest advertising companies in China. It sells ads on WeChat (known as Weixin in China), which serves 1.25 billion monthly active users as China's top mobile messaging and Mini Programs platform. It also sells ads through its older social media network QQ, Tencent News, Tencent Video, its mobile app store, and its mobile advertising network. Tencent's adverti…
The Growth of Its Fintech and Business Services Unit
- Tencent's fintech and business services unit -- which houses its payment platform WeChat Pay, Tencent Cloud, and other services -- grew its revenue by 40% year over year during the quarter and accounted for 30% of its top line. The segment's revenue rose 30% in the prior-year quarter. Tencent mainly attributed the segment's growth to a rising number of digital payment transactio…
The One Reason to Sell Tencent: China's Crackdown
- Tencent's core businesses are strong, but its recent regulatory challengesare overshadowing its strengths. China's State Administration for Market Regulation (SAMR) recently issued Tencent several small fines of 500,000 yuan ($77,000) apiece for previously unapproved investments and acquisitions, but several reports suggest those lighter fines coul...
The Bottom Line
- Tencent's past growth looks healthy, but its future looks murky. Therefore, I'd rather sell Tencent right now than buy it, since it's unclear when China's government will decide to drop the hammer on its core businesses. If those headwinds dissipate, I might consider buying the stock again.
Key Parts of Tencent's Business
Two Other Exciting Markets
- In recent years, China has become the epicenter of mobile payments and video games, and Tencent is perfectly positioned in both of these red hot markets. In 2016, China surpassed the U.S. to become the largest gaming market in the world. Competitive gaming and watching esports have become very popular activities in China, and Tencent has an economic interest in some of t…
What About Valuation?
- The company has managed to grow revenue at a compound annual rate of 41% per year over the last four years, and it is incredibly proftiable -- net profits and operating cash flow have grown right in line with revenue over the years. For that torrid growth, investors usually have to pay up, but the shares of Tencent trade at a forward P/E of 25, mor...