The China-based technology conglomerate Tencent Holdings Limited (HK:0700) (TCEHY) launched a highly anticipated party game, DreamStar, which could potentially start a gaming battle with rival NetEase Inc. (HK:9999). Analysts are highly bullish on this move and expect DreamStar to challenge NetEase’s popularity. The Tencent share price is trading up 2.35% today at the time of writing.
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Tencent Holdings is a prominent technology group serving a user base of more than 1 billion. The company also holds a significant position in the global video game industry.
Analysts Bullish on DreamStar
The newly launched DreamStar will allow gamers to embody cartoon characters and take part in obstacle races, competing directly with NetEase’s immensely popular game Egg Party. The unexpected success of Egg Party has contributed to an almost 40% surge in NetEase shares this year.
As per Reuters, analysts at J.P. Morgan think that DreamStar might hit NetEase’s revenues by 2%-3%. The bank adjusted its projections for NetEase’s revenue downward by 4% for the next quarter and 5% for the subsequent quarter.
Similarly, Goldman Sachs is also upbeat about the launch and expects DreamStar to generate revenue of ¥5 billion to ¥6 billion in its first year.
With the growing cutthroat competition in the gaming industry, Tencent is exploring multiple ways to capture a higher market share. Earlier this month, Tencent launched a high-budget console game called Last Sentinel, which has been marked as its most ambitious venture in the console market. The company is also eyeing international customers to complement its presence in China.
Is Tencent a Good Stock to Buy?
According to TipRanks’ rating consensus, 0700 stock has received a Strong Buy rating, backed by ten Buy and one Hold recommendations. The Tencent share price forecast is HK$446.8, which implies an upside of almost 45.8% on the current trading level.
