Tencent shareholders drown their sorrows as Chinese tech crackdown makes it less valuable than a booze firm

A hostile environment for Chinese tech companies has seen Tencent undergo a big reversal of fortunes.



Tencent, the Chinese tech and gaming colossus that you'll know for owning a slice of seemingly everything(opens in new tab) in the games industry, is no longer China's most valuable company. Bloomberg reports(opens in new tab) that Tencent's stock price has hit a five-year low, and its overall market capitalisation was overtaken late last month by—of all things—Kweichow Moutai, a Guizhou-based firm specialising in the production of Maotai rice wine. At time of writing, Kweichow Moutai had a $235 million lead over Tencent's market cap.

This would have been unthinkable just last year, when Tencent was trading at between $50 and $90 per share and was easily the most valuable company in China, but Tencent's fortunes have been brought low by the increasingly hostile domestic environment. A combination of China's tech crackdown(opens in new tab), strict COVID policies(opens in new tab), and generally flagging economic growth have made it hard for Tencent—and plenty of other Chinese companies—to do business. Tencent has wiped $650 billion off its market cap since the beginning of 2021.

The downturn in its fortunes has led Tencent to pursue a strategy of downsizing, imposing a wave of firings in departments across China(opens in new tab) in an effort to make up for its losses. The frosty Chinese market even partially explains Tencent's ever-growing presence in the western games market: it's been buying up non-Chinese companies(opens in new tab) precisely because it's currently so tough to do business at home.

The struggle shows no sign of letting up. Tencent got its first game approval(opens in new tab) from the Chinese government in over a year this September, and it's not like COVID is going anywhere any time soon. We can probably expect the company to continue cutting back at home and expanding abroad in the foreseeable future. Kweichow Moutai, on the other hand, stands to benefit from promised government support for "consumer-driven" sectors(opens in new tab). Maybe Tencent should just pivot into liquor production.

This is far from the end of the road for a company as massive as Tencent, but it is a stark illustration of how bleak things are looking for Chinese tech companies at the minute. Nevertheless, Tencent still has fingers in plenty of pies: aside from its stock woes, Tencent has most recently been in the news for penning deals with Ubisoft(opens in new tab), trying and failing to make a Lord of the Rings MMO(opens in new tab) with Amazon, and opening up an AI-governed nightmare hotel(opens in new tab) in Hangzhou. Not bad for what is now only China's second most valuable company.

sos


Ooooooof, guess all those purchases of murrican studios & properties were useless, eh?

TenCent only worth 10c

doesn't matters to me

This post has been edited by anakkk: Oct 22 2022, 05:59 PM

so no people play pubgee and do micro transaction already?

dying game

I would say the same as any other guy. But then this company have financial services that a lot of local companies are using. In some way it does matter if some payment gateway system that you are using suddenly cannot work because of that company having problems.

Don’t care. Pls pump aapl

booze and coffee is legal drugs almost everywhere.

overvaluation during covid time, like many many many companies

go see stocks of all tech companies during covid time

now it's value correction time + recession

though i agree tencent is now worth less during pre-covid time thanks to crackdown as well

Tencent's fall is reminiscent of Meta as well and eerily similar. Both got scrutinized heavily by their governments. Meta got flaked by US gov and Apple for privacy related stuffs.

This post has been edited by trojandude: Oct 22 2022, 09:16 PM

Kweichow Moutai belong to pla.

lagi x sedar ke. buy low sell hi
dellay no mored

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