Tencent has overtaken Alibaba to become the most valuable company in China.
Tencent Speeds Past Alibaba, Becomes Biggest Tech Company in China
Owner of the popular social messaging app, WeChat, has a compiled market capitalization of about $246.35 billion compared with Alibaba whose market capitalization is $242.04 billion.
Tencent’s performance went beyond forecasts for the second quarter driven by strong advertising and mobile gaming growth.
Total revenue for this second quarter was recorded at $5.38 billion, a 52% increase from the same time last year, trouncing earlier forecasts of about $4.20 billion.
Active monthly user accounts on WeChat rose to 806 million, a 34 % year on year increase.
Following the news, Tencent shares increased 5.08% at the start of trading on Thursday.
On a year to date basis, the Hong Kong-listed Tencent is also the best performing stock on the Hang Seng Index, recording a 26.56 percent rise.
Analysts have been particularly welcoming of the impressive earnings, betting that Tencent will likely dominate the mobile gaming and online space.
Indeed, the largest share of the company’s second quarter revenues can be attributed to online gaming with revenues for this sector growing 32 percent year on year up to 17.124 billion Yuan. The popularity of online gaming in China is primarily driven by smartphone games whose revenues more than doubled to settle at 9.6billion Yuan.
According to analysts Alex Liu and John Choi from Daiwa Capital Markets, “The mobile game pipeline by Tencent seems solid for the second half of 2016 into 2017.”
They added, “We anticipate increased revenue from the monetization of Supercell’s wide customer base in China and the introduction of location-based games.”
The analysts estimate that revenues from PC games increased 8 percent this second quarter.
Other analysts also provided a positive prognosis for Tencent’s growth.
Andie Wang and Richard Ko from KGI said that they see Tencent monetizing its mobile platforms and social networks, with the most growth expected to come from online advertising and mobile gaming.