Buy backs and stock prices plunge Tencent why "fall"

Buy backs and stock prices plunge Tencent why

Original title Tencent why "fall"

Reporter Zhang Jie reports from Beijing

Tencent's announcement, at a critical moment of profound change, said it would buy back its company's shares, but it still did not seem to be able to curb its tumbling share price.

In October 11th, the Tencent closed at HK $268.4 / share, which fell 6.28% on the day and its market value was HK $2 trillion and 570 billion. This is Tencent's share price decline for tenth consecutive days since September 27th. Tencent, which had previously built a game empire with a brutal replica, seemed to be facing development pains amid tightening policy and a transition period. Share price drops, a number of games continue to die is no doubt the current development of Tencent insurmountable obstacles to reality, what happened to Tencent?

Repo market and stock price crash

Before the industry was crazy about "Tencent will rise stocks" stocks are taking a fundamental twist. Even if Tencent tries to redeem it through repurchase, it can not make Tencent in reality wish.

On October 8, Tencent's share price fell below HK$300, its total market value fell below HK$3 trillion and its lowest offer was HK$299.8. On October 11, Tencent's share price fell again to HK$267, its lowest since July 2017. However, in October 12th, its share price began to rebound.

Previously, Tencent had repurchased shares for 20 consecutive times. According to previous information, Tencent Holdings announced on October 6 that it would buy back 128,000 shares at HK$39,036,800, at a price of HK$302.60 to HK$307.60 per share, accounting for 0.0228% of the issued shares. If calculated from September 7th, this is the twentieth consecutive trading day Tencent bought back.

The 4 trading day of the National Day holiday continued to decline in Tencent holdings.

Tencent Holdings closed down 1.92% on Oct. 2, 0.32% on Oct. 3, 2.41% on Oct. 4 and 4.65% on Oct. 4, with a total market value of HK $149.112 billion, or nearly HK $50 billion a day. Among them, the lowest level fell to 302.4 Hong Kong dollars per share on October 5, reaching the lowest level in nearly a year, with the highest drop of 6.95%. On October 9, Tencent's stock price was even more unexpected after its opening, and the continued decline has not been reversed.

In fact, this is not the first time Tencent has seen a sharp drop in share prices.

According to previous data, Tencent Holdings'share price has continued to fall since September, falling to HK $305.20 per share at one point, hitting a new year low and losing HK $3 trillion in market value. Tencent Holdings has repurchased 10 consecutive trading days of 10.777 million shares at a total cost of HK$343 million as of September 20, 2018.

"Tencent used to rely mainly on games to pull performance, but now the situation has undergone a qualitative change, under the strict control of the government, its performance has also had a significant downward trend, although Tencent has recently had to adjust the organizational structure, but the future content-led Tencent seems not to be the industry favorite." Insiders told reporters that fundamentally speaking, Tencent's future profitability has been questioned.

According to Tencent's latest second-quarter results for 2018, online games accounted for 34% of the company's total revenue of $25.202 billion. Game revenue rose 6% year-on-year, but fell 12.36% year-on-year, less than the first quarter's $28.778 billion. Among them, the smartphone game business revenue of 17.6 billion yuan, down 19% from the previous quarter, in the end of the second quarter, revenue fell 5% from the previous year, down 8% from the previous quarter, to 12.9 billion yuan.

At Tencent's mid-term earnings announcement on August 15, Liu Chiping, Tencent's chairman, also admitted that revenue from mobile games dropped 19% from a year earlier, mainly because: first, users no longer like tactical games; second, five of the seven new games were launched after mid-May; third and second The focus of the current games is to operate and improve users rather than monetization.

Game boards have been beset with problems.

"Tencent Holdings shares before the support of the pillar business online games problems, especially the continued weakness of its plate and a number of game approval encountered by the relevant departments strict control." Industry insiders told reporters that, in particular, version number approval stranded, so that the Tencent game board more difficult days.

Reporters learned that after the early September "Tiantiandi" announced a sudden withdrawal, Tencent's game sector seems to have entered a development dilemma. Subsequently, Tencent WeGame platform off the shelves of the agent operation of the action adventure game "Monster Hunter: The World," and clearly because of the report, the regulator asked to step down.

In addition, by the Ministry of Education and other eight departments on the issuance of the "comprehensive prevention and control of children and adolescents myopia implementation program" notice, also made Tencent shares fell at the time, half-day market value evaporated 154.2 billion yuan.

According to the documents at that time, the State Press and Publication Administration will regulate the total amount of online games, control the number of new online games, explore a suitable age reminder system in line with the national conditions, and take measures to limit the use of time for minors.

The most direct impact on Tencent is the approval of the version number.

Reporters learned that Tencent's "Jedi Survival" was not listed in the 2008 online game import approval information released on the website of the General Administration of Radio, Film and Television and the domestic online game approval information in February and March. Since then, no new list of approved Games has been announced. It is also understood that Tencent on-line the main reason for this game is to suppress competitors Netease similar chicken eating game "Wilderness Action".

"From this it seems that Tencent's development thinking of sniping competitors again by means of replication will also be frustrated." The aforementioned people told reporters frankly, this will certainly let the previous has been relying on the rapid development of the game Tencent directly affected, its future depends on the development of the game plate is also more tormented.

Finally, on September 15, Tencent announced that Tencent's "King's Glory" health system had been upgraded, formally connected to the authoritative public security data platform, and "the most stringent real-name verification" for all new users of the "King's Glory" game. Upgrade and indulge the system to protect minors' health.

Another industry analysts said that this will undoubtedly let Tencent in the commercial interests of the loss, however, this is also the network game platform should assume social responsibility, and the game industry is gradually moving towards the normative and rational only way.

Where is the road of transformation?

After more than a decade of savage growth, Tencent finally chose a decisive transformation, the future content-oriented, focused on functional games.

On Sept. 30, Tencent announced that it would optimize its organizational structure, split and reorganize the original seven clusters, and retain four new platforms and content clusters and cloud and smart industry clusters. From the perspective of new clusters, platforms and content clusters are directed towards social and content, while intelligence and industry clusters are centered around cloud computing and artificial intelligence.

For Tencent's organizational restructuring this time, the industry believes that this is a strategic shift from the core of the game to content-oriented Tencent. The move, hailed by the industry as Tencent's first restructuring in six years, was a self-help after its share price continued to fall.

In terms of games, Tencent, after being hit by this shock, no longer aggressively adds code to stimulate violent games, but the overall transition to functional areas.

In fact, as early as the beginning of this year, Tencent had foreshadowing. According to the data, on February 24, 2018, it announced a comprehensive layout of "functional games" and introduced five types of functional games, including traditional culture, cutting-edge exploration, science and engineering exercise, popularization of science and parent-child interaction, through proxy and self-research and other means, to give play to the value of games in education and cultural transmission.

At that time, Tencent had said that commercial recycling of functional games input costs was not in its plan. Some functional games are products with more obvious entertainment attributes, while others are things that actively promote research and landing.

In terms of profitability, functional games are slower than other games, and the layout time is longer. Relevant person in charge of Tencent admitted at that time, it may be compared to commercialization, early investment in time, energy, need to explore the path to more, or to do something solid foundation.

"This may be the industry's recent sustained bearish Tencent's main reason, not optimistic about the full transformation of Tencent's expectations, only rely on content profit, that is, only rely on advertising profits, how can the game industry's profitable." Observers from the industry analyzed the reporters.

After the Tencent's comprehensive transformation, how can we regain the golden age that we built on games? In this regard, our reporter will continue to pay attention.

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