Tencent beats analyst expectations

By: Miguel A. Rodriguez

09:45, 14 September 2020

Gaming companies increase their profits in the pandemic.

The Chinese conglomerate, Tencent, released today its financial report for Q1. The result beat analyst expectations. Due to the pandemic, more and more games played an essential part in keeping people busy.

The revenue increased 26% compared to the same period last year, reaching 108 billion Yuan. Revenue for online games increased by 31% to 37.3 billion Yuan, while the revenue on smartphone games was 34.7 billion Yuan. Both exceeded Jefferies analyst expectations of 31.6 billion Yuan. The company’s well-known game “Honor of Kings” got some upgrades which made the mobile games sector to sky-rocket. 

On the other side, PC game revenue fell approximately 17% to 11.8 billion Yuan because the internet cafes are closed.

Tencent’s ad revenue was 17.7 billion Yuan, outperforming the 19% from last year. But all in all, it is 12% lower compared to 2019's Q4. 16% of the overall revenue is from advertising, but is expected to slow down as in China, the ad market has a slow-growing rate. According to eMarketer, the income from ads will be around $113.67 billion, being the lowest since 2011.

Since the pandemic, the company’s market capitalization grew by more than $42 billion, being close to Alibaba and Baidu conglomerates. 

Roku, a company specialized in video games, gained 0.62% in stock price in premarket after it announced it managed to involve JP Morgan and Citigroup to sell 4 million shares. A date for the release of the financial report has not been communicated yet.

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Sources: cnbc.com, fool.com, nasdaq.com, reuters.com

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