Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Tencent profits soar even as China tech crackdown worries linger

Tencent profits soar even as China tech crackdown worries linger

Tencent is pulling in more money and plans on investing more in games and videos, even as Beijing expands its scrutiny of the tech sector.

The Chinese gaming and social media giant said Thursday that revenue jumped 25% to 135.3 billion yuan (about $21 billion) for the quarter ended March compared to the same period last year.

Profit soared 65% to 47.8 billion yuan ($7.4 billion), better than what analysts had projected, helped by lower interest rates and growth in its booming gaming business.

The company also announced Thursday that it would step up its investments in "new opportunities," such as game development and short-form video content.

That has likely turned off some investors, according to Hao Hong, head of research at BOCOM International, the securities arm of China's Bank of Communications. Tencent (TCEHY) shares slipped as much as 4% in Hong Kong on Friday.

"People are basically looking for excuses to cash out their stake in the company," said Hong. "There's always risk associated with new investments, so some people may want to take money off the table."

Investors may also be worried that the company could face the kind of severe scrutiny that has already engulfed some of the country's top players, including Alibaba (BABA).

Tencent shares are up 4% from the start of this year, but they have fallen some 23% from a peak in late January, as the Chinese government has escalated its crackdown. Hong, though, said regulatory fears may be overblown.

Once seen as one of China's biggest success stories, Jack Ma's Alibaba has now become a cautionary tale. It was hit with a record $2.8 billion fine last month for behaving like a monopoly.

That came after Alibaba's financial technology affiliate, Ant Group, was forced to shelve a record-breaking $37 billion IPO last year, when Ma landed in hot water with regulators. Ant was later also ordered to dramatically overhaul its operations, and become a financial holding company supervised by the central bank.

Since then, Tencent has continually been caught in the crosshairs, fraying investors' nerves.

Regulatory concerns


In March, CEO Ma Huateng, who is also known as Pony Ma, met with Chinese antitrust officials. Tencent stressed in a statement at the time that the gathering was a "voluntary" and "regular meeting," though shares slid that day.

Over the last few weeks, regulators have continued to tighten practices for dozens of tech companies.

In April, for instance, executives from 34 tech firms, including Tencent, were summoned to meet with authorities, who urged them to heed the warning from the Alibaba case and to stop anti-competitive behaviors.

That same month, Tencent was also one of the 13 companies that Chinese regulators ordered to address the most "prominent problems" of their financial units. (Aside from its ownership of WeChat, the ubiquitous messaging app, Tencent is known for its dominance in online payments in the country through its WeChat Pay platform, which boasts hundreds of millions of users.)

The move, which signaled that Beijing was determined to broaden the scope of its historic crackdown, once again sent Tencent shares down at the time.

Tencent President Martin Lau addressed the matter in an analyst call Thursday, emphasizing that the company was "very focused on compliance."

"We're very focused on risk management. We're very self-restrained in terms of the size of [some of] our ... financial products, especially on the lending side," he added.

"So when we look into the internal review and when we look into what are the things that need to be done in order to make sure that we are compliant with the spirit of the regulators, right, I think it's actually relatively manageable."

Pedestrians walking past a Tencent sign at the company's headquarters in Shenzhen in March.


This week, Tencent Music (TME), the company's US-listed music streaming subsidiary, also said it had been getting more attention from Chinese regulators.

"In recent months, we have received increased regulatory scrutiny from relevant authorities and have been actively cooperating and communicating with the relevant regulators," Chief Strategy Officer Tony Yip said on an earnings call.

"We are committed to comply with all relevant laws and regulations, including those related to antitrust."

Video games growth


With recent earnings, analysts were particularly impressed by Tencent's gaming business, which swelled at an extraordinary pace in 2020, and is still showing impressive growth.

Many video game publishers have enjoyed a boom during the pandemic, with more people staying home, and Tencent's intake from this division last quarter likely nearly matched what it brought in "last year during Covid," noted Bernstein analyst Robin Zhu.

Tencent is the world's biggest gaming company, especially known for its popular mobile game, PlayerUnknown's Battlegrounds (PUBG).

The firm said that revenue from its games business ticked up 17% to 43.6 billion yuan ($6.8 billion) from January to March, "primarily due to revenue growth from our mobile games worldwide, including Honor of Kings, PUBG Mobile, and Peacekeeper Elite, as well as recently launched titles such as Moonlight Blade Mobile."

Overall, Zhu said, "we'd argue this was a solid set of results."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
×