Analysts expressed confidence in Tencent following the release of the company's second-quarter 2019 report. Many industry experts believe the Chinese gaming giant could exceed the valuation mark of $500 billion once more.
Tencent posted revenue of 88.82 billion yuan for the second quarter of this year. While the figures did not reach analyst expectations, these numbers still represent a 21 percent increase in revenue, encouraging analysts to remain upbeat about the upcoming quarter.
Stock experts believe one of the company businesses that could help Tencent exceed the $500-billion market valuation is its fin-tech (financial technology). The WeChat Pay platform has gained popularity among Chinese users.
The company has done well in its strategy of paying subsidies to several merchants who use the platform in a bid to boost market share. Users who utilize the platform have also increased over the past months.
Aside from enhanced interest in the WeChat Pay platform, the revival of China's gaming industry is also expected to push Tencent back to its place in the circle of companies with over $500 billion in valuation.
When the Chinese government stopped approvals of games last year, some analysts predicted that Tencent will drop its gaming business and foray into other opportunities. At that time, it was unclear whether Beijing would approve games again.
Stocks went down in a dramatic way following the government's decision but months later, the approval ban was lifted. Tencent finally released "Peacekeeper Elite," and other games, which then helped improve the gaming unit's revenue figures.
Meanwhile, some experts in the advertisements sector expressed fears for the Chinese company's ads unit as rival ByteDance continues to earn in the advertising realm. The company's ads arm only grew by 16 percent in Q2.
Industry analysts further noted that Tencent's comeback after a largely disappointing 2018 appears to be coming at a much slower pace than expected of China's biggest gaming firm. Some experts also pointed out that the boom in fintech wasn't enough to bolster growth in the ads department.
Despite both good and bad sides to Tencent's Q2 2019 earnings report, as well as the company's stock going on shaky ground after the quarterly revenue was missed, many analysts believe the firm can still bounce back in the next two quarters.
The company said after the earnings report release that it will continue to "strengthen the Healthy Gameplay System for promoting balanced gameplay for young users." The firm was referring to Beijing's concerns over the potentially negative effect of some violent games to young gamers.
