Things should have gone better than they did for Chinese stock Tencent Holdings (OTC:TCEHY) in Friday afternoon’s trading. But even some new love from an analyst over what Tencent has been doing with its video gaming markets wasn’t enough to convince investors to buy in. Instead, investors fled, leaving Tencent down 2.53% in Friday’s trading.
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The word came in from a slate of Barclays analysts, who upgraded their position on Tencent from “equal weight” to “overweight,” and also posted a new price target of $50. Barclays pointed to Tencent’s revenue growth, which was up 11% over 2022’s second quarter figures. While some parts of the earnings report could have used a little help—mostly in revenue, which came in significantly short of analyst expectations—several parts delivered excellent results, like substantially improved earnings per share figures.
Another point that bedeviled Tencent was its domestic video game adoption rate. Such figures should be improving, as the Chinese crackdown on domestic video gaming finished in late 2022. There might be some overhang, especially if Chinese citizens are particularly distrustful of their government, but there are also signs the market is starting to come back on its own. In fact, Tencent directly created one of those signs itself; recent reports from VGC News say that Tencent will be hitting the upcoming Gamescom show in Germany with a new installment of its “Delta Force” FPS game. A teaser trailer is already out.
Also losing hope in Tencent, however, are hedge funds. Hedge funds currently stand at a confidence rating of “neutral” after having sold 32,200 shares last quarter. This is also the fourth consecutive quarter they have sold off Tencent stock after a massive sell-off a year ago that saw hedge funds reduce their exposure by over 99.2%.
