The China-based global conglomerate Tencent Holdings Limited (HK:0700) is exploring options to acquire gaming assets from TikTok owner ByteDance Limited. As part of the deal, Tencent reportedly intends to acquire the operations of ByteDance’s gaming unit Nuverse, known for successful titles like Crystal of Atlan and Earth: Revival.
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Potential Deal
ByteDance is in talks with multiple players, including Tencent, to sell its gaming titles in a move to withdraw from its gaming business and focus on other core areas.
Recently, Tencent announced the promotion of its crucial video game launch, DreamStar, on ByteDance’s platform, indicating improved relations between both companies amid growing competition in China’s gaming industry.
Based in China, Tencent is a leading internet company, providing a wide range of services such as communication and social networking, online PC and mobile gaming, cloud services, etc.
Tencent Share Price Performance
The Tencent share price is trading down by 1.3% today at the time of writing amid broader weakness in the Hong Kong stock market. Tencent witnessed a notable downturn in its stock in 2023, declining around 18%.
The stock hit a low point of HK$274 in December, following new regulatory guidelines issued by China for online gaming. The new regulations, like a ban on daily login rewards and reduced spending, came as a big blow to the gaming players, who enjoyed solid sales throughout the year.
Subsequently, Tencent has increased its buyback efforts to bolster its share price, resulting in a modest recovery since the decline.
Is Tencent a Good Stock to Buy Now?
Despite potential regulatory headwinds, analysts remain bullish on Tencent’s long-term prospects. On January 5, Jefferies analyst Thomas Chong reiterated his Buy rating on Tencent stock, predicting an increase of 65%.
According to TipRanks’ rating consensus, 0700 stock has received a Strong Buy rating, backed by 13 recommendations, of which 11 are Buy. The Tencent share price forecast is HK$432.68, which implies an upside of 50% on the current trading level.
