So far in 2018, Tencent’s stock price has continued to tumble from analysts’ price targets. Today, it sits at $430 billion, a far cry from its $570 billion market cap in January. Some commentators blame the decline on Tencent’s Q2 results, which showed a 2 percent drop in earnings and was the company’s first fall in profit in nearly 13 years. What is really going on here? What is the real cause? And what does it all mean for what is arguably still China’s leading internet company?
In this episode of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma take a close look at Tencent. TechBuzz first covered Tencent in episode 5, and again in episode 9. Fittingly, those episodes focused on public perception of Tencent’s ability to innovate, as well as the robustness of Tencent’s overall strategy — including against the likes of rising behemoth Toutiao. This week’s episode takes a more holistic view of the internal and external factors that may have contributed to Tencent’s poor results. Listeners will also hear expert commentary by Lee Gao, a portfolio manager at GCA, who helps run the firm’s Emerging Markets Sustainable Growth Fund.
Rui and Ying-Ying delve into many facets of the Tencent story, including: What was the significance of COO Mark Ren taking over the company’s stalwart gaming sector, which accounts for over 50 percent of Tencent’s revenues? What has been the greater impact of Tencent’s protocol of having multiple internal teams work on the same product, with the best one declared the winner? How has this type of strategy — and its accompanying lack of deep data integration — affected Tencent’s domestic market share on metrics such as total mobile usage time, as well as its ability to collaborate deeply with partners such as Starbucks? Is Tencent’s mantra of “Connect everything,” its official vision since 2014, being realized to the extent that it can be, in our increasingly AI- and algorithm-driven world? What about the impact of other problems such as unfavorable government policies, as well as Tencent’s challenges in getting games approved to be distributed in China?
Listen to the newest episode of TechBuzz China and join our co-hosts on a journey down the rabbit hole as they hunt for the real cause of Tencent’s recent price decline. While they synthesize the rampant recent speculation by Chinese media into a mere 20-minute episode, listeners are left to ask themselves: Can Tencent do it? Can they bring the lost $140 billion back?
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