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Tencent posted its biggest gain in more than three weeks after stronger-than-expected revenue suggested the WeChat operator is making headway against ByteDance in China's volatile internet sector.
China's largest company reported a 62% increase in net profit after advertising sales doubled through its TikTok-style video account service. Tencent's stock price rose as much as 4.8% in Hong Kong on Thursday, the first trading session after announcing its results.
These numbers are higher than rival Alibaba's and highlight the growing divergence between China's two internet powerhouses during the difficult post-COVID-19 recovery.
Tencent, the operator of China's ubiquitous social media giant WeChat, has shown how its TikTok-style service is gaining traction. The time users spend on his WeChat video account increased by 80%. This represents an effort by social media to steal engagement from his media rivals. This increased advertising sales by 26%. Growth in advertising and cloud services, combined with cost reductions, resulted in the company's highest gross profit since 2016, even as sales plateaued.
Vey-Sern Ling, managing director of Union Bancaire Privee, told Bloomberg TV: “Tencent is definitely doing well, their profit margins are improving, and advertising growth is strong. Online gaming is probably the second largest. “It will recover in the quarter,” he said.
“Tencent can build whatever monetization it wants around its core user group, because those users will never leave.” The world's second-largest economy has curtailed economic activity in the coronavirus era Now that we are emerging from the economic crisis, investors are increasingly interested in returns. Thorough crackdown on Big Tech. Tencent's market valuation had reached $460 billion before its latest earnings release, while Alibaba's had fallen to about $205 billion.
“Given better-than-expected domestic gaming and advertising revenue, better-than-expected margins and group profits, we expect Tencent's stock price to respond positively to the strong performance,” said JPMorgan Chase analyst Alex Yao. “There is,” he said. We believe Q1 2024 earnings will likely act as a short-term stock price catalyst, leading to positive earnings revisions and multiple expansion. ”
Tencent rose 4%. On the JSE, Prosus, which has large holdings of Naspers and Tencent shares, was flat but close to its highest price this year.
Stock price updates are carried out by News24 from the Media24 stable, which is owned by Naspers.
