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


bled
more than $50 billion of value since

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

selloff
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

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


Naspers Ltd.


declared
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

succumbed
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


multiples
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

most
in a week — hurt by signs that Beijing is

deepening
an ongoing crackdown on dissent and content deemed undesirable.



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

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