The comments from executives came after Tencent reported revenue growth all but evaporated in the first quarter, walloped by sweeping government restrictions as well as lockdowns across the country. The quarantining of much of Shanghai — the nation’s finance and media hub — obliterated commercial payments and may undercut advertising spending in the current quarter, they said, depressing big drivers of the social media giant’s business.
“We can clearly see that from the most senior level, there’s a pretty clear signal of support released. But for this to translate into real impact on our business, there is going to be a time lag,” Lau told analysts on a conference call. “It would take the specific regulators and ministries to translate this direction into real action.”
Tencent has so far largely escaped direct scrutiny from Beijing, but not fallout from the broader clampdown and economic malaise. It’s shed roughly $500 billion of market value since its 2021 peak, even as the company studiously endorses Beijing’s efforts to curb excesses in its once free-wheeling internet sector.2022 could mark Tencent’s second straight year of low single-digit EPS gains, putting its status as a China growth stock into question.
Given the new realities, executives said in March that international games, cloud software, and WeChat’s video accounts will be their major strategic foci. But overseas gaming sales expanded just 8% in constant currency terms, trailing the double-digit growth of previous periods, in part because of a tough comparison from a year earlier when the world was largely locked down.
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