Tencent Holdings Ltd (HK:0700) reported strong third-quarter results, beating earnings expectations mainly due to strong growth in its gaming, advertising and cloud segments.
Profit attributable to shareholders rose 47% year-on-year to 53.23 billion yuan ($7.37 billion), well above LSEG's forecast of 46.18 billion yuan. However, revenue came in slightly below estimates, rising 8% to 167.19 billion yuan versus the expected 167.82 billion yuan.
Gaming and advertising drive strong growth in Q3 amid global expansion
Games remain the cornerstone of Tencent's businesscontributing significantly to its growth. Domestic gaming revenue increased 14% year-on-year to 37.3 billion yuan, driven by new releases and sustained engagement with popular titles.
The international gaming segment also performed well, with revenue increasing 11% to 14.5 billion yuan in constant currency, highlighting the company's ability to expand globally and tap the “everlasting potential” of its game portfolio.
The marketing services segment, previously classified as online advertising, grew 17% to 29.99 billion yuan, emerging as one of Tencent's fastest-growing divisions. This growth reflects strong demand for advertising in the Tencent ecosystem, especially on Weixin (WeChat), where short videos, mini-shows and search functions are increasingly popular with advertisers.
Tencent's results indicate a successful diversification strategy, with promising expansion into international gaming and advertising markets. While revenue growth was slightly below expectations, the earnings beat underscores operational efficiencies and resilient demand across its core and emerging segments.
Tencent Stock Chart Analysis
Tencent Holdings Ltd (HK:0700) recently saw its share price fall following a period of selling pressure. The 15-minute candlestick chart reveals that the stock saw a steady decline from around HKD423 to a low of HKD396 in the past few days. This bearish trend could reflect profit-taking by investors or market reactions to broader economic uncertainties, despite Tencent's strong quarterly earnings report.
In the third quarter, Tencent reported a notable 47% increase in net profit to 53.23 billion yuan, exceeding expectations. Key drivers included strong performance in its gaming and advertising segments. Domestic gaming revenue grew 14%, while international gaming saw an 11% increase, underscoring Tencent's diverse portfolio and its ability to maintain high engagement across markets.
Additionally, the marketing services segment (previously online advertising) saw a 17% year-on-year increase, driven by demand for short videos and mini advertising programs on WeChat.
The recent bullish move from the low of HKD396 could signal a reversal as buying interest returns around a support level. Investors may once again view the stock as attractive after the recent decline, supported by Tencent's earnings strength. Further gains could be anticipated if the stock maintains support near this level and the overall market sentiment stabilizes. However, a break below this support could suggest continued volatility in the near term.
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