In a less favorable macroeconomic environment, advertisers have been controlling the budget, but Tencent's WeChat is also facing fierce competition in selling advertising space, including competitors' byte-jumping short-growth video application.
In the earnings conference call, Tencent executives seem to be working hard to plan a way to revive the company's performance. However, the company gives the impression that it is fighting various issues including competition in the domestic market, but its weapons reserves are seriously inadequate.
However, Bloomberg data shows that although Tencent's share price has fallen more than 10% in the past three weeks, none of the 57 analysts who tracked the stock suggested selling the stock. Lyon Securities (CLSA) analyst Elinor Leung pointed out that the company still dominates the game market, and the Chinese government has resumed the approval of the game version in the country.
Liu Chiping, president of Tencent, put forward some ideas on the conference call, involving long videos and short videos, as well as the scope of synergies, such as adding characters from games or novels (from Tencent's reading group) to the movie. But it has also encountered a similar situation before: trying to emulate YouTube in 2017, setting a limit on the content and investment of users and studios.
David Dai, an analyst at Bernstein Research, said that Tencent itself needs a new story. “If you are an investor, what are you investing in? In the past five years, it has been a game of it. But if you buy Tencent Tencent today, you will not bet its game. ""
Financial technology is an emerging field in which Tencent can try to create surprises. In the previous quarter, the company had a certain outbreak in the field for the first time, claiming that its user volume and transaction volume were both industry-leading, although revenue was not so impressive.
Once again, regulators have tightened their supervision of the financial technology sector. From January 1st, Tencent and Alibaba's subsidiary Ant Financial will no longer be able to use the funds of depositors to invest, which has lost a considerable source of income.
The market's remaining expectations for Tencent are mainly the expected growth of corporate services. In the second quarter, the cloud computing business generated $1.1 billion in revenue for Alibaba, up 66% year-on-year, while Tencent’s total revenue from financial technology and cloud computing increased 37% to 22.88 billion yuan, mainly from Commercial payment andcloud service.
Globally, most of the revenue of cloud computing companies comes from software services sold on cloud computing platforms. In this field, Chinese companies are still not comparable to companies such as SAP in Germany or Salesforce.com in the US.
Alibaba has taken the lead in Chinese companies and turned to cooperation to provide services earlier this year. The most striking thing is that it teamed up with Salesforce last month. This illustrates the difficulty of single-handedly fighting, and now it will mean that players in this field need to share the benefits. Competition in the Chinese market is also intensifying, especially in the field of cloud computing, and companies such as Baidu hope to lay a solid foundation in the field of cloud computing.
Tencent is also facing some other resistance. The company needs to find new growth drivers in the face of adversity. Like the millennials around the world, the 21-year-old Tencent is also growing hard.