2023-03-23 11:14:27 ET
Tencent Holdings ( OTCPK:TCEHY ) shares climbed more than 8% Thursday as the online-advertising and communications services giant reported quarterly results that fueled hope of a rebound in China's COVID-afflicted economy.
Prior to Thursday's market open, Tencent ( OTCPK:TCEHY ) reported fourth-quarter sales of $21B, which was up by just 0.5% over the year-ago period. However, Tencent's ( OTCPK:TCEHY ) revenue gains, while mild, came after two-straight quarters of shrinking sales.
The company's results were highlighted by a 15% increase in advertising revenue, as Tencent ( OTCPK:TCEHY ) turned its heels on four quarters in a row of declining ad sales. Tencent ( OTCPK:TCEHY ) said its sales from ad spending were led by gains from e-commerce platforms and videogame advertisers.
"Approximately half of our revenue across contribute and benefit from China economy activity, said Tencent Chief Executive Pony Ma, on a conference call to discuss the company's quarterly results. "And our business has stayed resilient when facing macro challenges, and we are well positioned to benefit from the economy."
Like many leading Chinese tech companies, Tencent ( OTCPK:TCEHY ) has been dealing with a combination of crackdowns on business operations and consumer behavior related to Beijing's stringent attempts to deal with the spread of COVID-19 across China. Those lockdowns and other efforts only began to be relaxed in late 2022.
Additionally, Chinese government regulators have spent more than two years imposing new guidelines and rules on how many of its companies handle and use the personal data of their customers.
Mizuho Securities analyst James Lee said that while Tencent's ( OTCPK:TCEHY ) were still "subdued" due to COVID, "we are starting to see the light at the end of the tunnel". Lee said with Tencent ( OTCPK:TCEHY ) seeing more strength coming from online games, advertising and fintech services, "we feel incrementally confident" about the company's growth prospects looking toward 2024.
Tencent's ( OTCPK:TCEHY ) results, and Wall Street's reaction, added to the sentiment of Seeking Alpha contributor Simple Investing, which earlier this month said gains in advertising and mobile games make Tencent ( OTCPK:TCEHY ) "well positioned" for the rest of this year .
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Tencent Holdings stock climbs 8% as sales results inspire Wall Street