Most Chinese tech businesses have seen their stock prices plummet over the past year, with several seeing double-digit drops in value. The fire sale resulted from mounting regulatory pressures and investor worries of stocks delistings.
Tencent Holdings Ltd. (TCEHY) is one such corporation, whose shares dropped about 36% in value over the last year.
The online service portal firm will reveal its fourth-quarter 2021 earnings figures before the market opens today.
Recap: Tencent’s Third Quarter Results
The company posted revenues of $22 billion in the third quarter, rising 13% year-over-year. Also, Tencent announced a $4.9 billion net profit attributable to the company’s stockholders, down 2% year-over-year.
In the meantime, adjusted EBITDA increased by 3% year-over-year to RMB49.3 billion.
On the balance sheet, the total cash was $44.6 billion at the end of the third quarter. Free cash flow, on the other hand, fell 14% year-over-year to RMB24.1 billion.
Tencent’s Q4 Earnings Expectations
Tencent has an excellent record of beating analysts’ consensus earnings forecasts. The company has beaten analyst forecasts over the past seven quarters in a row. Specifically, Tencent outperformed expectations by 44% in the most recent third quarter.
According to the experts, Tencent is expected to report adjusted earnings of $0.48 per share in the fourth quarter. The statistics indicate a 47% rise on a year-over-year basis.
However, it will be interesting to see if Tencent can outperform analyst expectations once more.
Investors Remain Hopeful
Despite the regulatory risks surrounding the company, investors have increased their exposure to TCEHY shares.
According to TipRanks’ Stock Investors tool, investors have an optimistic opinion on Tencent Holdings shares. Per the tool, 3.2% of the investors holding portfolios on TipRanks have increased their stake in TCEHY over the last 30 days. Furthermore, 2% of these individuals have reduced their holdings in the recent week.
Wall Street’s Take
The stock has picked up a rating from one analyst in the past three months. Barclays analyst Jiong Shao maintained a Buy rating and a price target of $76, which implies almost 50.2% upside potential from the current levels.
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