The rise of Tencent Holdings' share prices over the past couple of weeks has managed to surprise even the most bullish of analysts' forecasts. Most analysts have been caught off guard by the stock's recent rally and its continued climb to becoming one of Asia's largest equities.
The company's share prices are now gradually climbing towards the highest analysts' consensus target prices, a feat not accomplished by the tech firm in nearly two years. Analysts tracking the company's performance typically grade the stock as a clear buy, making it one of the most loves stocks in Hong Kong.
Since October, which was the stock's lowest point last year, Tencent's stock prices have managed to surge by more than 27 percent. This represented a massive $107 billion addition to the company's total market valuation. This week, Tencent's share prices topped at HK$405 per share. This was the highest level it had reached since 2018.
By Tuesday this week, Tencent's shares rose a further 1.6 percent to HK$413 per share. According to HKEX data, around 1 million shares changed hands through a series of block trades on Tuesday morning. This suggests that traders holding the stock were likely making the most out of the rally to take in their profits. The selloff caused the stock to dip by 1.5 percent before it settled to a price slightly above HK$400.
Analysts have pointed out that the rally in the stock can partly be attributed to a significantly better earnings outlook for the company this year. The company's gaming products, such as its PUBG Mobile video game, has performed very well. In December, the game became the world's top revenue earner and claimed the title as the second-most downloaded app globally.
The company's other video game titles, Call of Duty: Mobile, has also proven to be another big success. Despite just being released in October last year, the game has managed to make it into the top 10 biggest games for 2019.
Last week, Tencent revealed new plans to further capitalize on its popular WeChat social media platform. This included the launch of new customized tools that will provide more features for users. Analysts predict that the new innovations to the platform will likely have a limited impact but should still prove to be effective in improving short-term sentiment.
The surge in the company's stock prices is also particularly surprising given the company's sub-par performance in its latest quarter. For its fiscal third quarter, the company reported a drop in its profits of 13 percent, slightly below initial analysts' forecasts.
