🌟🌟🌟Why did
$TENCENT(00700)$ drop 6% after its latest earnings report? One of the main reasons is Tencent signalled higher Capex ahead as it stepped up its investment in AI infrastructure & ecosystem expansion.
Markets tend to punish rising capex because it pressures free cash flow in the short term.
Another main reason is that Tencent intends to reduce share buybacks. A slow down in capital buyback is not good because it removes one of the strongest, most reliable support of a stock valuation. For a giant like Tencent, that matters more than people would like.
Is this a short term misreading or a long term shift? I believe this is a short term misreading. Tencent's revenue, gaming, FinTech & AI enhanced advertising all remain strong.
Tencent's business fundamentals remain intact & it continues to dominate China's digital ecosystem.
This is a great time to bargain hunt Tencent especially if you are a long term investor.
@Tiger_comments @TigerStars @TigerClub
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