Tencent Holdings Ltd. has again eclipsed the market capitalization of Facebook, Inc, this time due to a huge 45% year-to-date rally in its shares. The rally has added some $201.44 billion (HK$1.56 trillion) to Tencent's market capitalization.
Tencent's value rise was also helped by the months-long shutdown in China and the rest of Asia due to COVID-19 that kept hundreds of millions of people at home with nothing to do but use their mobile phones. Tencent is now the seventh-largest global company.
Based in Shenzhen, Tencent is the world's largest video game company; one of the world's largest social media companies through a subsidiary, WeChat, and one of the world's largest venture capital firms.
WeChat is also the world's largest standalone mobile app with 1.2 billion subscribers. Revenue from social networks contributes 23% of Tencent's overall sales.
As of Tuesday, Tencent's market capitalization rose to $664.50 billion (HK$5.15 trillion) at mid-afternoon, Singapore time. In contrast, Facebook's market cap amounted to $656.15 billion as of Tuesday's close on Wall Street. Facebook's shares have risen 14% year-to-date.
Tencent's market cap has surpassed Facebook's before. This first took place in late 2017 and a number of times in 2018. Facebook, however, stayed ahead of Tencent for the full-year 2019, according to data from S&P Global Market Intelligence.
"With rising China GDP growth, we will see more and more Chinese companies entering the top 10 or top 100 companies," said Kenny Wen, wealth management strategist at Hong Kong-based financial firm, Everbright Sun Hung Kai.
"This long-term trend will continue in the foreseeable future. However, the pandemic and worsening China-U.S. relationship may make the situation complicated."
Jefferies Financial Group analyst Thomas Chong predicts Tencent's stock might improve to HK$651 over the coming 12 months due to its massively popular video games. Chong says Tencent is a "global mobile games powerhouse."
Adding more future value to Tencent is the proposed takeover of its ally, web search firm Sogou, Inc., which is listed on the New York Stock Exchange. Sogou is a subsidiary of Sohu, Inc.
Tencent already owns a 36.5% stake in Sogou and this week made a preliminary non-binding proposal to acquire its remaining shares for $9 for each of the American depositary share (ADS) it doesn't already own.
Sogou is a leading challenger to China's biggest search service, Baidu, Inc, which operates the world's second-largest search engine after Google.
