Tencent, Tech stocks and the impact of Corona virus

Tencent earnings will be out on 19th March .

Its earnings are being watched closely as it will be a bell weather for the Chinese tech stocks and their Outlook in the Corono hit world.

Tencent’s overall business can be divided into 4 broad areas :

Social Media and Financial services are still growing healthily.

The challenge is Gaming and Advertising where growth had declined in the last 2-3 quarters.

Expectation of Earnings

This segment will see an increase wrt MAU and engagement metrics as more and more people spend time inside the house.

The focus in last 2 quarters was on internationalization and expanding to overseas markets . Now this will need to be seen wert how successful and how fast they can do this.
Titles like Honor of Kings and Peace Keeper Elite have seen increased DAUs of late as more on more people spend time in home..
Chinese regulators approval to allow publish Super Mario Odyssey and Mario Kart 8 Deluxe, taking the number of licensed switch games in China to three. This also will be good for Tencent

Advertising in these segments may increase but overall Digital Advertising spend may be impacted by the broader industry outlook as we may expect Advertising Spending cuts esp from SMEs .Also Digital advertising is seeing whole new set of competition .New competitors across new segments are emerging. E.g Short Video format like Tiktok ( Bytedance ) has seen a big growth.

Tencent has been aggressive overall in the Business services esp Tencent Cloud.

It has built new nodes to improve its visibility.

But again it is a competitive space as Both AWS and Alibaba have been very aggressive about the same.

I still think Tencent may break up the gaming business/Fintech business in future .

Flipkart did it with PhonePe and received a Valuation boost for the PhonePe part.

So this can be the next move once the IPO market picks up for Tencent

The full video can be watched on

The Rule of 40 in Investing

Challenges and opportunities for Tencent