Tencent stock price had a good performance in 2024 as it became one of the best performers in the Hang Seng index. It has jumped by 40% this year, helped by the rebound in some prominent Chinese technology companies. So, what next for Tencent in 2025?
Tencent boosted by Beijing policies
Tencent and other large Chinese technology companies went through a painful period as Beijing tightened screws on the sector.
While Alibaba was the biggest victim of this crackdown on tech, other firms like Tencent were also affected. For example, Beijing authorities implemented policies that affected the gaming industry.
Most large Chinese tech companies did modestly well as Beijing ended the crackdown in its bid to improve the sector. Besides, tech is a pivotal sector for China now that the real estate sector has largely collapsed.
For starters, Tencent is the biggest company in China with a market cap of near $500 billion. It is much larger than other tech firms like Alibaba, PDD Holdings, Meituan, and BYD.
The company’s business touches most people in China and around the world. For example, WeChat has over 1.38 billion users, making it one of the biggest social media companies globally.
Tencent also owns companies like Tencent Games, Tencent Video, Weishi, Tencent Music Entertainment, LiCaiTong, Tencent Portfolio, and Tencent Blockchain. It owns more companies across other sectors.
Strong financial results
Tencent stock price also jumped as the company published moderately good financial results that showed steady revenue growth and profitability.
The most recent results showed that Tencent’s revenue rose by 8% in the third quarter to over 167 billion RMB. Most of this revenue came from its value-added services, which brought in over RMB 82.7 billion in revenue.
Tencent’s fintech and business services made RMB 53.1 billion, while its marketing services made RMB 30 billion, representing a 17% YoY growth.
Its gross profit jumped to RMB 88.8 billion, as its operating margin jumped from 33.4% to 36.6%. Net profits rose by 33% to over RMB59.8 billion.
These numbers meant that Tencent’s business was booming, which may continue in the coming years. For one, some of its games like Valorant, Honour of Kings, Peacekeeper Elite, and Delta Force have seen substantial growth in the past few months. The company is in talks to acquire Ubisoft, a major gaming publisher.
Additionally, Tencent is working on becoming a major player in the artificial intelligence space through its Weixin Search. As part of this, the company is in talks to collaborate with Apple and ByteDance in China.
The company’s music subscriptions jumped to over 119 million, while its video subscriptions rose to 116 million.
Most importantly, like other top Chinese companies, Tencent has one of the healthiest balance sheets with a net cash position of $13.6 billion. With tech companies doing well, Tencent’s fair value of its listed investments stood at over $87 billion. Its unlisted investments are worth almost $50 billion.
Altogether, there are signs that Tencent is a highly undervalued compared to its global peers like Amazon and Apple, which have become trillion-dollar companies.
Tencent stock price analysis
The daily chart shows that the Tencent share price staged a strong comeback, soaring from HKD 258 in January to RMB 482 in October. This recovery happened as Beijing softened its views on technology companies and as its business continued growing.
Tencent stock has moved above the key support at HKD 410, its highest level in January last year. It has also jumped above the 50-day moving average. The Average True Range (ATR) indicator has retreated slightly, a sign that its volatility is fading.
Therefore, the Tencent stock price will likely hold steady in the next few months and make a strong return in 2025. If this happens, the next point to watch will be at HKD 482.
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