Tencent posts first profit decline since 2005 on lower gaming revenue, investment gains
Tencent surpassed US$500 billion in market value last year, becoming the first Asian company to achieve the distinction. But its shares have declined from a January record on concerns about a slowing gaming business
Tencent Holdings, which has lost more than US$150 billion in market value since January, reported a 2 per cent drop in second-quarter profit on lower gaming revenue and investment-related gains.
Net income fell to 17.9 billion yuan (US$2.6 billion) in the quarter ended June 30, compared with 19.3 billion yuan average of 12 analyst estimates compiled by Bloomberg. Sales were 73.7 billion yuan, missing analyst estimates.
Tencent’s mobile-game business reported a decline of 19 per cent to 17.6 billion yuan from the prior quarter, as it failed to get approval to charge fees for popular tactical tournament games and new game releases were delayed.
Its shares were down 3.6 per cent at HK$324 in Hong Kong trading as of 09:50am.
“In the third quarter, we expect gaming revenue growth to stay positive year-on-year due to increased monetisation of existing popular games,” said equity analyst He Saiyu in a co-written report from Huatai Financial Holdings. “Mini programs should help to boost Tencent’s cloud, advertising and online payments business growth … User traffic and engagement levels across all the major platforms [including WeChat and QQ] within Tencent are all growing at a healthy pace.”