Tencent shares slide after revenue miss and margin warning

Tencent Holdings lost almost $20 billion (€16.2bn) from its market value on Thursday after the Chinese internet giant missed quarterly revenue estimates and warned that planned investments may hurt margins.

By noon Tencent shares were down 3.29 per cent against a 0.63 per cent dip in the benchmark Hang Seng Index, wiping $18.4 billion off the company’s market capitalisation. They had dropped as much as 4.6 per cent earlier in the morning.

Tencent posted a 98 per cent jump in quarterly net profit on Wednesday, beating estimates, although revenue grew slower than expected at 51 per cent.

With a market capitalisation of about $542 billion, Tencent is Asia's most valuable listed company and the world's fifth behind Apple, Alphabet, Amazon. com and Microsoft.

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Company president Martin Lau warned at a briefing on Wednesday that the company planned to invest "aggressively" in areas including video and payment, which may hurt margins.

Tencent's gaming revenue in the last quarter was disappointing as average revenue per user declined quarter-on-quarter, said Jefferies analyst Karen Chan. However, she said the outstanding performance of Tencent's new mobile games this year boded well for growth, and that rapid adoption of WeChat in-app services may lead to more monetisation potential.

“We expect FY18 to be another year of investment but view it necessary to further expand its market leadership in video and offline payment,” she said in a note accompanying a target price raise by 1 per cent to HK$530. – Reuters