Tencent Stock Up 4%, Aims to Set New All-time High after Better Than Expected Q1 Earnings

UTC by Steve Muchoki · 2 min read
Tencent Stock Up 4%, Aims to Set New All-time High after Better Than Expected Q1 Earnings
Photo: Depositphotos

Tencent (TCEHY) stock is aiming to break above the 2018 and all-time high of around $58. The rise is bolstered by the strong balance sheet in the first three months of 2020.

Tencent Holdings Ltd (OTC: TCEHY) stock closed the market on May 13, 2020, with a 4.48% rise to trade at $57.83. The shares maintained the same price in the after-hours session. In the past 52 weeks, the shares have ranged between $40.33 and $58.66.

The Chinese multinational holding company, which specializes in different internet-related services and products including entertainment, and also artificial intelligence, has experienced a sharp uptick in its earnings since the beginning of the year.

Mainly fueled by people opting to stay at home, the shares have been on the rise since mid-March. The Tencent (TCEHY) stock is now up over 21% in the past year, 9.34% up in the past three months, and 13.47% up in the past month.

Since its business is mainly in China, where most businesses are springing back to life, it might be a contributing factor for the constant rise. The company, however, anticipates the mobile game uses to normalize as people slowly return to their workplaces.

Tencent (TCEHY) Stock React on Q1 2020 Report

Tencent shares are expected to continue rising higher, thanks to the Q1 2020 earnings report that beat expectations. The company reported a 26% year-on-year rise, after posting 108 billion yuan in the first quarter. Analysts had estimated the company to post 101.4 billion yuan in the same period.

On the other hand, the profit attributable to equity holders of the company hit 28.9 billion yuan. The results beat analyst expectations of 23.83 billion yuan. As a result, it reciprocated to a 6% year-on-year rise.

The figures reported were a result of more people from China playing the company’s smartphone games while under lockdown. “Games serve important roles in keeping players entertained and connected, especially during the stay-at-home period. For mobile games, our studios released attractive content and our publishing teams ran compelling in-game events and activities, resulting in higher DAU (daily active users),” the company said in a statement.

According to the report, the online game’s revenue grew 31% year-on-year to 37.3 billion yuan. In addition, the total smartphone game revenue came in at 34.7 billion yuan for the first three months.

The company also reported a strong ad growth, whereby it collected 16% of its revenue from the advertising sector. Tencent recorded 17.7 billion yuan in the ad revenue, which was 32% up year-on-year.

“Our online advertising revenue grew year-on-year, reflecting increased consumer time spent on our key apps during the stay at home period and the attractive ROIs we delivered to advertisers,” added the company in its statement.

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Steve Muchoki
Author: Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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