TCEHY stock forecast: strong profits, but major concerns

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The Tencent stock forecast is mixed, with pressure coming from Beijing

There’s a big cloud over the Tencent stock forecast right now as China continues a clampdown on its biggest tech companies.

While Beijing knows that this sector is crucial to ensuring that the country is competitive on the global stage, the ruling Chinese Communist Party has put technology companies on a short leash. We saw a dramatic example of this when Jack Ma, the charismatic founder of Alibaba, disappeared from public view for more than three months. During the fall of 2021, we also saw China roll out strict, new data privacy laws, to regulate how personal information is collected, stored and shared.

Although the Tencent brand isn’t particularly well-known in the West, it’s a crucial part of life in China. Its WeChat platform, which is not too dissimilar to WhatsApp, has racked-up more than 1 billion users. This state-censored “superapp" delivers far more than the ability to message your friends: it also serves as a news source, a payments platform and a food delivery service. You’re bound to hear about WeChat when Beijing hosts the Winter Olympics in February 2022.

Tencent stock projections also reflect the fact that this company invests aggressively, and now has its fingers in many pies. It has a stake in everything from Tesla to Fortnite, not to mention world-leading music labels and the streaming service Spotify. In early 2020, Tencent said it had invested more than $12bn in a portfolio of 800 investments, which is heavily skewed towards gaming and entertainment. Of those, Tencent boasts 160 have reached “unicorn” status, valued at $1bn or more.

Pressure on the Tencent share price forecast isn’t coming from China, either. Donald Trump pursued plans to get WeChat banned during his final few months in office – and although those threats evaporated, the Securities and Exchange Commission has been clamping down on Chinese companies that are publicly listed in the US. (Some of Tencent’s subsidiaries, including Tencent Music, appear on the New York Stock Exchange.)

WeChat
Tencent’s WeChat platform has more than 1 billion users – Photo: Shutterstock

In this article, we’re going to examine the Tencent stock forecast, delve into the company’s most recent financial results, and look at the challenges and opportunities that lie ahead for this Chinese conglomerate.

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What’s happening with Tencent’s stock price?

Tencent’s share price made some gains in early 2021, but that didn’t continue beyond February.

The company’s stock has slumped somewhat, to HK$468 on 1 December 2021. Considering that the price stood at HK$766.50 on 25 January, that is a loss of almost 39%.

Tencent released its latest tranche of results on 10 November, covering the third quarter of 2021. Total revenue came in at $22bn for the three months. That’s up 13% compared with the year before, but the slowest growth since going public in 2004. This resulted in a profit of $5bn over the period, a 2% decline, year-on-year.

Tencent stock: buy or sell?

The fall in Tencent’s stock price in 2021 has been severe, to say the least. In July 2021, Tencent lost a whopping $170bn market value. There are concerns that Tencent might be forced to spin-off its financial services into a separate holding company, which would be bad news for the Tencent stock forecast.

Let’s finish up by taking a look at the Tencent stock forecast. According to CNN Money, 47 analysts looking ahead 12 months assigned a median $77.51 target in over-the-counter US trading, with a $100.10 high estimate and a low of $58.91. Of the 52 analysts that gave recommendations, 40 said buy and five hold, while seven expect it to outperform.

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FAQs

Possibly. While the Tencent share price has been hit recently, a lot of analysts are predicting it will bounce back. How long that will take remains subject to conjecture and, if you are going to invest, you should do your own research and never put in more money than you can afford to lose.

Probably not, if the analysts are to be believed. Out of the analysts who CNN use, no one is saying it will underperform, let alone recommend selling. However, things change all the time, so use appropriate caution. This might suggest that the Tencent stock price isn’t too high. 

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