Tencent’s $50 Billion Plunge Isn’t Enough to Scare Analysts

Tencent Holdings Ltd.
’s having about as bad a month as

Facebook Inc.
— on financial markets, at least. Analysts are betting it’ll pull through.

The Asian social media colossus has

more than $50 billion of value since

on March 21 of dwindling margins. Shortly after, it got caught up in a global

of internet stalwarts as investors fretted about the risk of regulatory tightening in the wake of Facebook’s

Cambridge Analytica
controversy. Then it came under pressure when the prospect of a

war with the U.S. intensified. In the middle of all that, largest shareholder

Naspers Ltd.

it was unloading a $9.8 billion stake.

The 53 analysts who cover Asia’s largest stock are mostly standing firm. The gap between its shares and their

average price target
has ballooned to more than 20 percent. That’s the biggest increase in the disparity among peers from beleaguered Facebook to fellow Chinese internet giant

Alibaba Group Holding Ltd.
, which like Tencent

in part to fears about margin-erosion.

Tencent Falls Behind

Gap with analysts’ price targets has widened most among peers since March earnings

Source: Bloomberg

The average 12-month target price on Tencent remains at the highest it’s been in a year. Despite hints of lower profitability, many investors believe Tencent’s WeChat and game development prowess will help it sustain growth. That’s helped push its two-year earnings

to more than 34 times — higher than peers from Alibaba to

Baidu Inc.
, and 46 percent above the industry average.

Looming over Tencent however is the less-predictable impact of government regulators and censors, which maintain a careful watch over the country’s internet media. On Thursday, its shares slid a further 1.5 percent — the

in a week — hurt by signs that Beijing is

an ongoing crackdown on dissent and content deemed undesirable.

Read more: Once-Invincible Tencent Joins Ranks of Internet Mortals: Gadfly

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *