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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. Those restrictions also coincided with a temporary suspension on new video game approvals in China, which started last July and ended this April. Tencent's domestic gaming business was once its main growth engine. But it's sputtered out as the government has imposed tighter playtime restrictions for minors and temporarily suspended the approval of new games last year. All told, Tencent is a highly diversified company that provides many FAAMG-like services to Chinese and global users. In some ways, Tencent actually looks ahead of its western counterparts, in particular by utilizing its social media platform for payments and many other services, and by finding more ways to monetize its intellectual property than just a subscription service.

1. 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.
2. Those restrictions also coincided with a temporary suspension on new video game approvals in China, which started last July and ended this April.
3. Recently beaten-down China online gaming stocks rebounded on Wednesday in Hong Kong on news of a more conciliatory tone on the sector by the country's top gaming regulator.
4. Tencent generated 31% of its third-quarter revenue from its video game business.

For now, investors should avoid Tencent and stick with more-promising growth stocks in this challenging market. Its VAS revenue rose 7% year over year to 71.9 billion yuan ($11.3 billion) during the quarter, compared to its 8% growth in the third quarter and 28% growth in the year-ago quarter. That slowdown was mainly caused by the sluggish growth of its domestic gaming and social network businesses, which largely offset the stronger growth of its international gaming business. Tencent's clever use of its social media platform and intellectual https://www.forexbox.info/ 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. 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...

Although it's not a major contributor to revenue, Tencent offers cloud computing/data center solutions (they are the third largest cloud computing player in China) and business software solutions like Tencent Meeting (the leading video calling solution in China). Beijing's internet clampdown isn't done yet, wiping tens of billions of dollars off the value of games companies, but the damage is hard to quantify. 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... 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.

Tencent And NetEase Stocks Continue To Rebound As China Reportedly Ousts Official Who Proposed New Gaming Restrictions

Fortunately, it is the only game in town, and it could keep that position for a while. Tencent's 2022 results might have disappointed its longtime shareholders, but make no mistake. Besides, in the name of common prosperity, the government has indirectly extracted 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. Unfortunately, political risks are unavoidable when investing in Chinese companies. Tencent's stock was trading at $37.79 at the beginning of the year.

Since then, TCEHY shares have decreased by 7.4% and is now trading at $34.98. 3 Wall Street equities research analysts have issued "buy," "hold," and "sell" ratings for Tencent in the last year. There are currently 1 hold rating and 2 buy ratings for the stock. The consensus among Wall Street equities research analysts is that investors should "moderate buy" TCEHY shares. 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. For example, emerging markets stocks did quite well in the "lost decade" for USA stocks between 2000 and 2010.

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. 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. 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.

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. 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... As of writing, Tencent's stock has a price-to-earnings ratio of 16. 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.

The Chinese tech giant's growth has slowed to a crawl.

But I expect that over the long run, Tencent will recover to new highs. 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 https://www.dowjonesanalysis.com/ very few people timed the bottom of the dip perfectly. 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...

Chinese stocks surged on Tuesday amid reports of mooted stimulus plans and a sign that tough draft tech rules could be eased. 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. 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. Investors of record on Friday, May 19th will be given a dividend of $0.2691 per share on Tuesday, June 20th.

Tencent's acquisitions

For example, its regulatory crackdowns on the online education and tech industries have severely impacted Tencent's advertising and cloud income. Like most Chinese stocks, Tencent Holdings (TCEHY 2.70%) 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.

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. Tencent (TCEHY 2.70%) 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.

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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... 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. Tencent generated 31% of its third-quarter revenue from its video game business.

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...