Citigroup: Tencent's stock price has fallen excessively, and its gaming business remains robust
Citigroup believes that Tencent's stock price has fallen excessively, and its gaming business remains robust. Although the market is concerned about a slowdown in gaming revenue for the second quarter, analysts point out that this does not reflect the full picture, and globalization and product diversification ensure its fundamental strength. It is expected that domestic gaming revenue in the second quarter will decrease by 3.9% quarter-on-quarter and increase by 8% year-on-year
Citigroup stated that Tencent's stock price drop on Wednesday created a better buying opportunity, as market concerns over its second-quarter game revenue slowdown were overblown.
Alicia Yap and other Citigroup analysts wrote in a report that Sensor Tower data indicates the company's second-quarter game revenue may have declined, but this does not reflect the full picture, as the spending behavior of Android users may differ.
Even if Tencent's announced second-quarter game revenue is disappointing, the ongoing globalization and diversification of its game product portfolio should mitigate the impact of this fluctuation on the company's underlying gaming business strength.
Citigroup expects Tencent's second-quarter domestic game revenue to decline by 3.9% quarter-on-quarter, but increase by 8% year-on-year.
Tencent ADR fell 6.1% on Wednesday; Hong Kong stocks dropped 7.1%
