Closing In On Facebook And Amazon, Chinese Tech Giant Tencent Crosses The $500 Billion Valuation Mark

Tencent became the first Asian company t hit a valuation of more than $500 billion as it hit a record high earlier in the week.

Closing in on the tech firms like Facebook and Amazon in terms of market valuation, this technology firm is the first from China to reach the landmark valuation.

The shares of the company rallied to reach 420 Hong Kong dollars ($53.76) on Monday at the Hong Kong exchange where the internet giant – famous for its WeChat messaging app and online games, is registered. At the close of the market, 3.99 trillion Hong Kong dollars ($510.7 billion) was the total value of its all the shares in circulation or its market capitalization.

Chinese tech company Baidu’s market cap is at $82.97 billion whereas that of Chinese e-commerce giant Alibaba is at $474.15 billion and hence the market cap for Tencent is higher than those and all other Chinese tech companies.

U.S tech giant Amazon has a total market value of $544.46 billion while the figure for Facebook is $520.14 billion and the Chinese tech company is seemingly closing in on those two U.S. tech giant.

Priced at 3.70 Hong Kong dollars per share, Tencent went public in Hong Kong in 2004. The share value of the company has since increased 11,251 percent. There has been an increase of 121.4 percent in the shares of the company this year itself.

Investments into new areas, huge user base and continued revenue growth have been the driving factors for Tencent’s rising share price. The comoany beat market expectatioons last week after it reported a 67 percent year-on-year growth in net profit for the third quarter.

With a user base of nearly a billion users, WeChat is the most profitable and popular product of Tencent.

With revenues generated to the tune of over $4 billion last quarter, the company’s online and mobile games segment is a very important part of its business. Finnish smartphone maker Supercell, the company accredited for the popular “Clash of Clans” mobile game, saw Tencent taking up a majority share-holding position last year.

Online advertising and digital content such as video, are among the other fast-growing products of the company.

The company has been making big investments in the U.S. even though the company is not yet a household name in there. Stakes in companies like Tesla and Snap have been taken up by the company and it has also made investments in multiple startups in Asia which includes investments in Ola in India where it is a rival of Uber.

A positive view on Tencent were expressed by analysts. The price target for the company shares was raised $49 to $59 on Monday by Barclays. The price target for Tencent was raised to 480 Hong Kong dollars by Daiwa Capital Markets last week.

“Tencent’s disciplined execution and well-positioned multi-engine growth strategy should sustain its valuation premium in the medium to long-term,” Daiwa said in a note on November 15.

(Adapted from CNBC)


Categories: Economy & Finance, Sustainability, Uncategorized

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