Further crackdown on online gaming has been factored into Tencent Holdings Ltd.’s shares and the firm is set to benefit from patents, according to a report by Bloomberg on Friday.
- Tencent has been a major victim of China’s unprecedented clampdown on its tech sector, with its shares down close to 40% from a record high in January.
- Jefferies retains its buy rating on the stock and projects a 16% revenue growth in the third quarter.
- In a Thursday note by analysts including Thomas Chong, Issues regarding minors’ gaming hours and the impact on ads from education-focused regulations are “priced in.”
- Increasing ad demand from the Winter Olympics in China could offset lost revenue from edutech companies.
- Shares of the Shenzhen-based tech firm have jumped 6.5% in the last two years, after stopping a five-day rout as part of the wider growth stock selloff on rising yields.
Restrictions on gaming time and regulatory scrutiny of ads have hurt the stock, which has temporarily kicked out of the world’s 10 largest companies based on market value in September. Tencent Holdings Ltd up +2.21%