Tencent In A Stock Market Crash!

General news News 10/22/2022

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One of the Chinese tech companies with a presence in the Western games industry is already worth more than a company that makes rice wine (baijiu).

Tencent and NetEase have been everywhere lately, but the former has suffered a huge disappointment. It is no longer the most valuable Chinese company: Bloomberg reports that Tencent’s share value has fallen to a five-year low, and its market capitalisation at the end of September had pushed the tech giant down to second place among Chinese companies. Now in the first place is a Guizhou-based Maotai rice wine company, Kweichow Moutai, with a value of $235 million ahead of Tencent.

Meanwhile, last year, Tencent’s share price hovered between $50 and $90 and looked unstoppable, but the home turf is not falling for them. Chinese tech companies are under pressure from the Chinese Communist Party (which just concluded its 20th congress), which continues to push for zero-COVID regulations. The country’s economic performance is unsuitable for Tencent (but it also applies to many Chinese companies). Since the beginning of 2021, the company’s value has plummeted by $650 billion (!!!), and in September this year, they received a license to launch a new game in China (because they have frozen license approvals).

The situation in China has made Tencent (and NetEase…) decide to expand abroad, where they have more freedom than at home, but it looks like their struggle will continue for a while. The coronavirus won’t suddenly disappear, and games won’t suddenly get the censors’ approval in bulk. At the same time, Kweichow Moutai has also received government support due to being in a consumer-focused sector. It’ll be tough for Tencent to stand up from here.

They’ve had their share of trouble: they indeed bought into the family business that owns the most significant stake in Ubisoft, their Lord of the Rings MMO with Amazon has been cancelled, and they’ve opened an AI-driven hotel in Hangzhou (it’s scary even to describe, let alone spend a night there). What can happen after all this…?

Source: PCGamer

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Angyal Anikó

Anikó, our news editor and communication manager, is more interested in the business side of the gaming industry. She worked at banks, and she has a vast knowledge of business life. Still, she likes puzzle and story-oriented games, like Sherlock Holmes: Crimes & Punishments, which is her favourite title. She also played The Sims 3, but after accidentally killing a whole sim family, swore not to play it again. (For our office address, email and phone number check out our IMPRESSUM)