Due to improvements in the gaming segment, Tencent Holdings Ltd. reported second-quarter results that were above projections.
Revenue for the big Chinese internet giant was 161.12 billion Chinese yuan, or roughly $22.5 billion. While earnings increased by 82% over the same period, revenue increased by an astounding 8% YoY.
Its stock has now had a minor decline of 1.44% the day following the news and 1% during the previous five days.
Tencent’s revenue is driven by gaming.
The share price has increased by 28% since the start of the year, partly due to sales of a new game named Dungeon & Fighter Mobile (DnF Mobile).
More than any other Tencent game, the game made $270 million in China in its first month of sales. According to AppMagic, the game has been downloaded more than 5 million times on iOS in China alone. Players spent $63 million on the game in the first week of its release.
The most recent figures show that game income climbed 9% annually, totaling 34.6 billion yuan for the corporation. This was matched by an equivalent increase in revenue from international games.
The Growth of Tencent’s Advertising
Revenue from online advertising reached 29.9 billion yuan ($4.18 billion), a 19% increase. Channels, WeChat’s short-video feature, has been the primary motivator. With over 813 million monthly active users, Channels has experienced remarkable growth since its launch, surpassing its rivals Kuaishou (390 million users) and Douyin (680 million users).
The business is always enhancing its offerings by giving channels monetization options, including paid memberships and live-streaming e-commerce.
Due to a decline in loan services and a modest increase in consumer spending, Tencent’s fintech revenue climbed 4% to 50.4 billion yuan ($7.05 billion).
Tencent’s share drops due to poor metrics.
However, Tencent Music Entertainment Group (TME) let analysts and investors down with a 1.7% YoY decline in second-quarter sales.
$985 million, or 7.16 billion yuan, was made. Earnings per share, which were 1.07 yuan, or $0.15, barely matched estimates. Compared to 1.29 million yuan the previous year, net income was 1.68 million yuan.
Forecast for Tencent Holdings
The target stock price, according to Barron’s, is approximately $70 (high), with a low of $38.97. Every analyst recommended buying the share. This is nearly the same as what MarketWatch’s estimates also show, indicating the share’s solid position.
52 analysts were polled by TradingView to provide their price targets for the upcoming year. The analysts predict that the share price will bottom out at 306.2 HKD, while they hold 546 HKD, which is the maximum projection.
Prospects for the Future
Tencent is optimistic about the company’s future. Tencent channels have already been rebranded and improved by the firm, giving moderators access to more texting and live streaming services as well as customizable tools for channel management.
Building on a robust e-commerce and content ecosystem, Mini Programs’ overall user time spent increased by 20% year over year. Additionally, they have enhanced their major titles, including Peacekeeper Elite and Honor of Kings, which can boost sales.
Ten million DAU per month have already been attained by Naruto Mobile. The company also plans to begin offering services to its industries, like healthcare and connected automobiles, as part of its long-term strategy.
