Tencent Holdings Ltd
Updated
Is Tencent Stock a Buy Now?
Tencent 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 ($19.8 billion), which represented its second consecutive quarter of declining revenue since its IPO in 2004. Its net profit rose 1% to 39.9 billion yuan ($5.6 billion). On an adjusted basis, which excludes its investments and other one-time items, its net profit grew 2% to 32.3 billion yuan ($4.5 billion). Those growth rates seem anemic, but Tencent's stock had already been cut in half over the past two years amid concerns about China's tightening regulations, slowing economic growth, and COVID19 lockdowns. So is it the right time to take the contrarian view and buy Tencent as a turnaround play? Let's review its core businesses and valuations to decide.
Tencent generated 31% of its third quarter revenue from its video game business. Domestic games, which include its blockbuster game Honor of Kings, accounted for 73% of that total. The remaining 27% came from overseas hits like League of Legends, Valorant, and PUBG Mobile.Its domestic gaming revenue fell 7% year over year, representing its third consecutive quarter of shrinking revenue, as it grappled with tighter playtime restrictions for minors in China over the past year. Those restrictions also coincided with a temporary suspension on new video game approvals in China, which started last July and ended this April.Its international gaming revenue rose 3% year over year, accelerating from its 1% decline in the second quarter, as new games like Tower of Fantasy and Goddess of Victory: Nikke attracted new players. Unfortunately, its overseas growth still couldn't offset its declining domestic revenue.
As a result, Tencent's total VAS (value-added service) revenue which includes its gaming divisions, social media platforms, and streaming media subscriptions -- declined by 3% in the third quarter but still accounted for more than half of its top line. This core business might gradually stabilize as Tencent expands its international gaming business, but it will likely remain under intense pressure as long as the Chinese government continues to scrutinize the gaming industry.
200$ was one of the biggest support and great opportunity to buying the dip. 300-320$ is a big resistance level for tencent and if bulls win that battle then 350$ is next but
can we back 250 or even 200$ again? YES
Tencent 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 ($19.8 billion), which represented its second consecutive quarter of declining revenue since its IPO in 2004. Its net profit rose 1% to 39.9 billion yuan ($5.6 billion). On an adjusted basis, which excludes its investments and other one-time items, its net profit grew 2% to 32.3 billion yuan ($4.5 billion). Those growth rates seem anemic, but Tencent's stock had already been cut in half over the past two years amid concerns about China's tightening regulations, slowing economic growth, and COVID19 lockdowns. So is it the right time to take the contrarian view and buy Tencent as a turnaround play? Let's review its core businesses and valuations to decide.
Tencent generated 31% of its third quarter revenue from its video game business. Domestic games, which include its blockbuster game Honor of Kings, accounted for 73% of that total. The remaining 27% came from overseas hits like League of Legends, Valorant, and PUBG Mobile.Its domestic gaming revenue fell 7% year over year, representing its third consecutive quarter of shrinking revenue, as it grappled with tighter playtime restrictions for minors in China over the past year. Those restrictions also coincided with a temporary suspension on new video game approvals in China, which started last July and ended this April.Its international gaming revenue rose 3% year over year, accelerating from its 1% decline in the second quarter, as new games like Tower of Fantasy and Goddess of Victory: Nikke attracted new players. Unfortunately, its overseas growth still couldn't offset its declining domestic revenue.
As a result, Tencent's total VAS (value-added service) revenue which includes its gaming divisions, social media platforms, and streaming media subscriptions -- declined by 3% in the third quarter but still accounted for more than half of its top line. This core business might gradually stabilize as Tencent expands its international gaming business, but it will likely remain under intense pressure as long as the Chinese government continues to scrutinize the gaming industry.
200$ was one of the biggest support and great opportunity to buying the dip. 300-320$ is a big resistance level for tencent and if bulls win that battle then 350$ is next but
can we back 250 or even 200$ again? YES
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we hit the first target ✅Note
we hit all targets ✅Note
it can have correction to 340$ level then another jump to 355 and 359
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375, 380 and 390$ are next targets
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Chinese government entities are set to take so-called “golden shares” in units of Alibaba Group Holding Ltd. and Tencent Holdings Ltd., suggesting Beijing is moving to ensure greater control over key players in the world’s largest internet arena.Note
we hit out first targetNote
we hit our second target too ✅Note
we hit all targets ✅ cheersNote
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Tencent Cloud, the cloud service business of China's largest Internet company, announced its full entry into WEB3, announced cooperation with Ankr, Avalanche, Scroll, and Sui, and released a new Tencent Cloud Metaverse-in-a-Box product.Note
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345, 347 and 349 are next targets
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we hit all targets
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its Baldurs Gate3 green candle
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Trade active
Trade active
Down trend got broken and we going up
I remain bullish on Tencent, and we are probably still in the early stages of the next bullish wave that could lead Tencent’s stock price much higher. The combination of making its Weixin/WeChat network denser by adding more services and features, as well as growing its gaming offerings internationally are only two ways the business will continue to grow. Tencent is also generating huge amounts of free cash flow that can be used either for acquisitions – and management was a great capital allocator in the past or share buybacks. Overall, we can be confident that Tencent will continue to grow at least in the high single digits or probably even double digits, and even high single digit growth is enough to make the stock undervalued.
Trade active
Trade active
strong and bullish
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