Friday, December 6, 2019
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Tencent Profit Sinks 32%, Gaming Business On Recovery Mode

Tencent Profit Sinks 32%, Gaming Business On Recovery Mode

Tencent (TCEHY), the Chinese social media and gaming company faced a huge drop in its profit for the last quarter of the year. There was a 32% drop from that of last year and came down to 14.3 billion yuan ($2.1 billion).

The plunge in profit was attributed to the US listing of Tencent Music, its streaming music subsidiary. Tencent Music, TME’s shares have plunged by more than 10% in New York. According to analysts the company suffered a damage of $224 million. The month of January witnessed the shares thriving to record highs. However it suffered badly in August followed by the regulation imposed on gaming in China. However the last quarter had become better for them, where the revenue was 84.9 billion yuan ($12.7 billion) after a rise of 28%. Almost 30% of Tencent’s revenue comes from games. There was a nine month freeze on new approvals for making profit from games and this left the company suffer badly.

Tencent’s gaming business however is thought to give them profit in 2019. The revenues from mobile games have rose by 12% to $2.8 billion. Daiwa, the brokerage firm hoped that their stocks will be drawing in more investors soon as their gaming sector is pulling in more money and users. In one of the reports by the Daiwa analyst, they said that they have every chance to recover because they have the ability to get the best quality game even in adverse market conditions.

Tencent’s most anticipated mobile games namely ‘Fortnite’ and ‘Player Unknown’s battlegrounds’ are waiting for approval. Analysts at HSBC said that Tencent’s rival NetEase (NTES) has got approval for their shooting game FortCraft which is similar to FortNite. This gives hope that they will not have to wait long for getting approval for FortNite. HSBC analysts find that Tencent’s strong gaming, online payments, advertising and cloud service fundamentals will help them survive through any hardships. Their shares closed down about 2% on Thursday in Hong Kong.

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