Tencent (OTC: TCEHY) posted its second-quarter earnings on Wednesday. The Chinese tech giant's revenue rose 20% year over year to 138.3 billion yuan ($21.3 billion), meeting analysts' expectations but decelerating from its 25% growth in the first quarter. Its adjusted net income rose 13% to 34 billion yuan ($5.2 billion), beating estimates by 1.2 billion yuan.
Tencent's stock price rose slightly after the report, but it's still shed over 20% of its value this year amid China's crackdown on its tech sector. Should investors ignore that noise and buy the stock, which looks historically cheap at 26 times next year's earnings, or should they avoid it? To decide, let's examine three reasons to buy Tencent -- and one compelling reason to sell it.
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3 Reasons to Buy Tencent, and 1 Reason to Sell