Bloomberg ranked Tencent Holdings Ltd. stock as "the most disappointing" out of the 10 companies worth $100 billion that majority of the market analysts gave a "buy" rating.
Bloomberg said the disappointment on Tencent arises from its complete flip from hitting a record high of HK$474.60 or $60 per share - climbing to as much as 64,000 percent during its first trading in 2004 - to its decline by about 30 percent over the last six months this year.
In Hong Kong on Tuesday, the stock dropped 22 percent at $41 per share. This radically wiped out a total of about $108 billion in its market value.
Tencent has been facing a number of challenges due to the Chinese government's strict regulations on gaming, particularly in content that could be harmful to children's health and well-being.
First, Tencent was compelled to pull out Monster Hunter: World because the government perceived it as incompliant with its set regulations. The company had also delisted Tencent Poker - Texas Holdem for the same reason.
Just last month, Tencent announced that it will begin requiring its users to key in their real names and age before they can play Honor Kings. This will prohibit teenagers from playing the game for more than two hours and children under 12 for more than an hour a day.
Tencent has also delayed the release of new gaming products following the new gaming regulations implemented in the country.
Bloomberg said analysts are nevertheless hesitant to give up their bullish bets on the stock. An article from Forbes has noted similar behavior among analysts.
The report said there is still a considerable number of investors who remained bullish on Tencent stock despite its decline. These analysts remained optimistic because China's strict government regulations may actually limit the competition among game developers in the country. They expect that quality content makers like Tencent will have the capacity to finance needed adjustment for their content, dominating the market in the long run.
Analysts were also optimistic since Tencent will soon be monetizing its massively popular games, PUBG and Fortnite.
Elsewhere in the news, Tencent-backed companies are actually doing well in the market. Meituan Dianping has just debuted in Hong Kong IPO on Sept. 20. This positioned the online food delivery-to-ticketing services firm at an estimated $55 billion valuation Reuters reported.
Tencent Music Entertainment, a subsidiary of Tencent Holdings, is next to raise about $2 billion in a U.S. listing in the coming months, Reuters said in a separate report. The company has already filed its confidentiality with the U.S. Securities and Exchange Commission according to the report. If this will push through, it will be one of the largest flotations in New York by a Chinese company for 2018.
