Will Tencent fly to the moon or return to earth tomorrow?
$Tencent Music(TME)$ stock price fell on NYSE market opening today despite its just-reported first-quarter revenue beating estimates as the Tencent-controlled, Spotify-like music streaming platform benefited from a growth in paying users, reversing a gain of almost 9% in premarket trading.
Will this be a precursor to its parent $TENCENT(00700)$
As macroeconomic headwinds continue to rear their ugly heads around the globe, while global economies struggle with sticky inflations, rising interest rates and escalating geopolitical tensions that have shown no signs of easing, Tencent’s vast business empire including its stakes in numerous startups is not spared either.
As a stark contrast to astrological growth in its online gaming platform at the onset of COVID-19 pandemic when populations around the world resorted to online gaming and other indoor entertainments amidst border closures and movement restrictions, re-opening of global economies are now posing challenges to Tencent’s major source of revenues with workers returning to offices and students returning to schools. Lifting of travel restrictions has seen hordes of people putting aside their gaming hardware amidst growing distractions from traveling and other outdoor activities. This is not helped by increasing regulatory governance over screen times by young children and teenagers.
Hopefully as the Chinese regulatory clampdown on its tech sector pauses and measures to renew growth gains traction, Tencent will be able to crank up all its growth engines and regain its past glory.
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