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Tencent Holdings (OTC:TCTZF) Stock, Option Chain

Tencent holds a prominent position in China's internet sector, with a diverse portfolio of products and services used daily by a significant portion of the population. The company is the world's largest video game publisher and owns Honor of Kings, a top-grossing mobile game globally. Tencent also operates WeChat, China's largest social media super app, which has become deeply integrated into the daily lives of Chinese people for communication, entertainment, shopping, and more. Beyond its offerings, Tencent is a significant player in global venture capital and investment. The company holds substantial stakes in leading tech companies, including PDD, Kuaishou, and Epic Games.

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Tencent is using AI to boost ad targeting and create dynamic ad visuals, positioning itself for sustained growth in the digital ad space.

EXCLUSIVE: Tencent Leverages AI To &#39;Enhance Ad Targeting Precision,&#39; Says Expert

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KraneShares&#39; Henry Greene shared insights on China&#39;s dynamic market and their focus on future growth in industries like internet/technology and electric vehicles.

EXCLUSIVE: &#39;China&#39;s Stock Market Has Bottomed, Indicating A Potentially Rare Opportunity,&#39; Says Investment Strategist

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China&#39;s economy faces deep structural problems, analyst says, but a broader financial crisis or economic recession is unlikely.

China Market Woes Far From Over, Analyst Says: Talk Is Cheap, But Urgent Action Needed

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Tencent Holdings Ltd (OTCPK:TCEHY) (OTCPK:TCTZF) is harnessing the power of AI to shake up the digital advertising space in <a href="https://www.benzinga.com/quote/TCEHY/news">a big way</a>. 
In an exclusive interview with Benzinga, Derek Yan, senior investment strategist at KraneShares, said that the Chinese tech giant is positioning itself to maintain a competitive edge and sustain growth in the rapidly evolving digital landscape.
<h2 class="wp-block-heading">Tencent&#8217;s AI Initiatives To Supercharge Marketing Efforts</h2>
"Tencent is leveraging its proprietary AI models to enhance ad targeting precision and attribution tracking," says Yan. This has been a critical driver of Tencent's impressive advertising revenue growth, enabling advertisers to reach consumers more effectively and boost click-through rates.
In a space where precision is everything, Tencent's AI models are proving invaluable. But the company isn't stopping there. Yan highlights how Tencent is "equipping advertisers with generative AI tools that can dynamically create ad visuals tailored for various ad placements." 
This capability allows advertisers to produce more engaging, customized ads on the fly, which has the potential to supercharge their marketing efforts and drive even more revenue.
<h2 class="wp-block-heading">How Tencent&#8217;s TikTok Rival &#8211; WeChat Is Capitalizing On New Opportunities</h2>
Tencent's flagship platforms, particularly WeChat and its video account feature (a rival to ByteDance's Douyin and TikTok), still have "substantial untapped potential for further monetization," according to Yan. 
Integrating AI technologies could unlock new opportunities to capitalize on this potential. In fact, Tencent's Executive Director and President, Martin Lau, mentioned in a recent earnings call that AI is expected to provide a near-term boost in ad revenue.
According to Yan, even a modest 10% increase in ad load within the WeChat and video account ecosystem could generate an additional RMB 10 billion (approx. $1.4 billion), most of which would go straight to profit.
<a href="AI To 'Turbocharge' Alibaba's Cloud In Bid To Rival Microsoft, Amazon, Says Strategist" target="_blank" rel="noreferrer noopener">Read Also: EXCLUSIVE: AI To &#8216;Turbocharge&#8217; Alibaba&#8217;s Cloud In Bid To Rival Microsoft, Amazon, Says Strategist</a>
<h2 class="wp-block-heading">Tencent&#8217;s Advertising Getting Stronger</h2>
With AI integration driving both operational efficiency and revenue growth, Tencent's advertising game is only getting stronger. The real question is whether Tencent can continue to outpace competitors and fully capitalize on AI's potential, or will rivals like Alibaba Group Holding Ltd (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABA#NYSE">BABA</a>) (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABAF#NYSE">BABAF</a>) close the gap?
One thing's for sure—Tencent is betting big on AI to keep its digital dominance intact.
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/09/40821034/exclusive-ai-in-china-the-sleeping-giant-awakens-kraneshares-strategist-says-we-sho" target="_blank" rel="noreferrer noopener">EXCLUSIVE: AI In China — The Sleeping Giant Awakens? KraneShares Strategist Says We Should Be Paying Attention</a></li>
</ul>
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EXCLUSIVE: Tencent Leverages AI To 'Enhance Ad Targeting Precision,' Says Expert

In an exclusive interview with Benzinga, Henry Greene, Investment Strategist at KraneShares, shared insights into the investment approach and opportunities in <a href="https://www.benzinga.com/topic/china">China&#8217;s dynamic market</a>.
KraneShares, with its focus on capturing the essence of the &#8220;New China&#8221; economy, emphasizes industries positioned for long-term growth. Greene noted that KraneShares is uniquely focused on the future growth of China, &#8220;as opposed to the industries that have driven the &#8216;Old China&#8217; economy, such as manufacturing, real estate, and financials.&#8221;
<h2 class="wp-block-heading">China&#8217;s Internet Penetration Rate Presents An Opportunity</h2>
Regarding promising sectors, Greene highlighted China&#8217;s internet and technology industries. &#8220;China&#8217;s internet penetration rate remains low at 74%,&#8221; he stated, indicating significant growth potential. This is despite its consumers spending twice as much online as in the U.S. Per Greene, the government in China is currently prioritizing the development of domestic technology companies, especially in electric vehicles, clean tech, and semiconductors.
<h2 class="wp-block-heading">Optimism Amid Challenges: KraneShares CSI China Internet ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KWEB#NYSE">KWEB</a>)</h2>
Greene expressed optimism about China as an asset class despite geopolitical tensions. He emphasized the overselling of Chinese companies by global investors and the resulting opportunities. &#8220;Geopolitical tensions don&#8217;t impact the underlying businesses of many companies in our KWEB ETF,&#8221; Greene affirmed.
The KWEB ETFs&#8217; top holdings include: Tencent Holdings Ltd (OTCPK:TCEHY) (OTCPK:TCTZF) (9.76%), Alibaba Group Holding Ltd Ordinary Shares (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABA#NYSE">BABA</a>) (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABAF#NYSE">BABAF</a>) (9%), Meituan Class B (OTCPK:MPNGF) (OTCPK:MPNGY) (7.97%), PDD Holdings Inc ADR (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PDD#NASDAQ">PDD</a>) (6.56%) and NetEase Inc Ordinary Shares (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NTES#NASDAQ">NTES</a>) (5.99%).
To address investor concerns about volatility, KraneShares has launched two ETFs providing downside protection on KWEB: 
<ul>
<li>KraneShares 100% KWEB Defined Outcome January 2026 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KPRO#NYSE">KPRO</a>)</li>
<li>KraneShares 90% KWEB Defined Outcome January 2026 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KBUF#NYSE">KBUF</a>)</li>
</ul>
<h2 class="wp-block-heading">China&#8217;s Emergence As World&#8217;s Largest Vehicle Exporter</h2>
Discussing the automotive sector, Greene noted China&#8217;s emergence as the world&#8217;s largest vehicle exporter. &#8220;This represents a significant opportunity but also poses challenges,&#8221; he explained. &#8220;Increased imports from China may lead to protectionism in some economies.&#8221;
Related: <a href="https://www.benzinga.com/markets/asia/24/04/38066697/chinas-ev-wars-heat-up-chery-launches-new-brand-to-battle-tesla-and-huawei">China&#8217;s EV Wars Heat Up: Chery Launches New Brand To Battle Tesla And Huawei</a>
<h2 class="wp-block-heading">China&#8217;s Stock Market Has Bottomed &#8211; Capture The Opportunity</h2>
&#8220;China's stock market has bottomed, indicating a potentially rare opportunity to buy assets at valuations not seen for decades,&#8221; Greene said. He added that KWEB as a good way to access China&#8217;s top internet stocks, noting that its holdings have a price-to-earnings ratio of 18x compared to the 31x of U.S. internet firms.
On the topic of artificial intelligence (AI), Greene highlighted opportunities beyond hardware companies like Nvidia. &#8220;We see more opportunity in the companies that are developing applications of large language models (LLMs),&#8221; he said.
KraneShares&#8217; Greene provided valuable insights into the evolving landscape of China&#8217;s markets and the investment opportunities they present. With a focus on innovation and growth, KraneShares continues to navigate the dynamic Chinese economy for investors seeking exposure to its burgeoning sectors.
Read Next: <a href="https://www.benzinga.com/markets/asia/24/04/38070613/billionaire-investor-ray-dalio-remains-bullish-on-china-despite-a-looming-100-year-storm-the-time-to">Billionaire Investor Ray Dalio Remains Bullish On China Despite A Looming &#8216;100-Year Storm&#8217;: &#8216;The Time To Buy Is When Everyone Hates The Market&#8217;</a>
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EXCLUSIVE: 'China's Stock Market Has Bottomed, Indicating A Potentially Rare Opportunity,' Says Investment Strategist

While China&#8217;s ailing stock markets have <a href="https://www.benzinga.com/markets/asia/24/02/36953993/china-stocks-surge-after-beijing-announces-new-measures-xi-jinping-steps-in">regained some ground</a> in the past couple of sessions, thanks to pledges and rhetoric that market losses will be addressed, there are more fundamental risks at play that equities could continue their downward spiral throughout 2024.
Primary among these is economic growth. Without growth, corporate profits decline, unemployment rises and consumers stop spending. 
And the outlook doesn&#8217;t look good according to analysts at the Asia Society Policy Institute (ASPI), a New York City-headquartered think tank.
<h2 class="wp-block-heading">Economy Continues To Struggle Post Covid-19</h2>
Foremost, says analyst Nathan Levine, is China&#8217;s economy will continue to struggle, having failed to fully bounce back following a series of punishing COVID-19 lockdowns.
&#8220;China's economy faces deep structural problems and is increasingly running into the limits of its current growth model,&#8221; says Levine.
For decades, he adds, China relied on investment-led growth as it showered infrastructure, real estate and manufacturing sectors with cash, while consumers maintained high rates of savings. That was OK, as China exported its finished goods to hungry consumers around the world. 
But that model no longer works as overspending — particularly on the real estate boom — and China&#8217;s increasingly tense trade relations with the U.S. and other parts of the world have stifled exports.
&#8220;China is now awash in high levels of debt, and overspending on a property construction bubble has led to a significant crisis,&#8221; says Levine. 
&#8220;Further weighing on the economy is largely stagnant productivity growth and a private sector shaken by President Xi Jinping's insistence on growing the Party-state's control over the economy and finance.&#8221;
Also Read: <a href="https://www.benzinga.com/news/earnings/24/02/36979600/why-is-alibaba-stock-trading-lower-wednesday">Why Is Alibaba Stock Trading Lower Wednesday?</a>
Meanwhile, domestic consumer demand has only become more sluggish and Levine believes restoring robust growth will hinge on whether Chinese consumers can be convinced to spend, and private sector entrepreneurs to invest.
&#8220;A broader financial crisis or economic recession is unlikely, but China's economy is likely to continue to at best muddle through in 2024 rather than demonstrate a significant recovery,&#8221; he concludes.
<h2 class="wp-block-heading">Leadership Becoming More Autocratic</h2>
So what is this likely to mean for the markets? If, as Diana Choyleva, also of the ASPI, believes, Xi Jinping&#8217;s focus will be on security and the re-emphasis of Marxist-Leninist ideology, then it&#8217;s not looking good.
&#8220;Private entrepreneurs have reduced their willingness to invest for the long term, while foreign investors have also become wary and are increasingly pulling their money from China,&#8221; she says.
Measures taken so far to restore market confidence, beyond a few pledges and some short-term, Band-Aid market intervention, amount to a change of leadership at the country&#8217;s securities regulator.
What happens to further these pledges in the coming days will be paramount, as markets aren&#8217;t easily fobbed off by empty promises. So, authorities must act quickly.
On Wednesday, the mainland indexes were higher again, with the Shanghai Composite up 1.44% and the Shenzhen up 2.9%. However, the Hang Seng in Hong Kong dipped 0.3%.
The iShares MSCI China ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MCHI#NYSE">MCHI</a>), an exchange-traded fund that tracks blue-chip stocks on the Hang Seng, was down 1.7%.
Among its top holdings, Tencent Holdings Ltd (OTC:<a class="ticker" href="https://www.benzinga.com/stock/TCTZF#OTC">TCTZF</a>) shares were down 1.26% and Alibaba Group Holding Ltd &#8211; ADR (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABA#NYSE">BABA</a>) slid 5.93% after its fourth-quarter <a href="https://www.benzinga.com/news/earnings/24/02/36979600/why-is-alibaba-stock-trading-lower-wednesday">earnings failed to meet</a> market expectations.
Read Now: <a href="https://www.benzinga.com/markets/asia/24/02/36953993/china-stocks-surge-after-beijing-announces-new-measures-xi-jinping-steps-in">China Stocks Surge After Beijing Announces New Measures, Xi Jinping Steps In</a>
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In a recent announcement, Tencent Holdings Ltd (OTC:<a class="ticker" href="https://www.benzinga.com/stock/TCEHY#OTC">TCEHY</a>) subsidiary Riot Games revealed plans to lay off approximately 11% of its global workforce.
What Happened: Riot Games, the developer of popular titles like &#8220;League of Legends,&#8221; will be reducing its staff by 530 employees, Reuters reported on Monday. This decision is attributed to the company&#8217;s struggle to expand its audience amid high inflation.
CEO Dylan Jadeja acknowledged the need for a more focused approach, stating, &#8220;Today, we&#8217;re a company without a sharp enough focus, and simply put, we have too many things underway. Some of the significant investments we&#8217;ve made aren&#8217;t paying off the way we expected them to. Our costs have grown to the point where they&#8217;re unsustainable.&#8221;
See Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/01/36695781/ai-stocks-dominate-in-january-nvidia-juniper-palo-alto-lead-the-charge?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">AI Stocks Dominate In January: Nvidia, Juniper, Palo Alto Lead The Charge</a>
The layoffs will primarily affect teams outside of core development. Riot Games will also discontinue new game development under &#8220;Riot Forge&#8221; and make adjustments to &#8220;Legends of Runeterra.&#8221;
Why It Matters: The gaming industry has been experiencing a series of layoffs. In 2023, over 10,000 workers were laid off, with one-third of game developers being directly or indirectly affected, <a href="https://www.benzinga.com/general/gaming/24/01/36700407/layoffs-hit-one-third-of-game-developers-in-2023-survey-shows-devs-rally-for-unionization-question">according to a survey</a> from the Game Developers Conference (GDC).
The company&#8217;s leadership, especially at Alphabet Inc&#8216;s Google (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>), has faced <a href="https://www.benzinga.com/news/24/01/36709679/employees-slam-google-leaderships-vision-in-wake-of-layoffs-they-are-all-profoundly-boring-and-glass">criticism from employees</a> amid these layoffs, with some openly expressing dissatisfaction.
Furthermore, the impact of artificial intelligence (AI) on jobs has been a growing concern. The International Monetary Fund (IMF) <a href="https://www.benzinga.com/news/24/01/36626708/ai-could-impact-40-of-global-jobs-imf-warns-will-likely-worsen-overall-inequality">warned that AI could potentially</a> increase income inequality, urging policymakers to mitigate this trend.
Read Next: <a href="https://www.benzinga.com/news/24/01/36705957/elon-musks-x-accused-of-unlabeled-ad-promotion-for-mrbeasts-1-car-vs-100-000-000-car-video?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Elon Musk&#8217;s X Accused Of Unlabeled Ad Promotion For MrBeast&#8217;s &#8216;$1 Car vs $100,000,000 Car&#8217; Video</a>
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Tencent's Riot Games To Cut 11% Of Global Workforce, Citing Unsustainable Costs

While China&rsquo;s property sector faces a tight credit crunch, consumer stocks might be oversold after new data shows that the mainland economy is bouncing back better-than-expected, say some investors.
Wednesday, major consumer names Alibaba Group Holding Limited (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/baba#NYSE">BABA</a>), Tencent Holdings Limited (OTC: <a class="ticker" href="https://www.benzinga.com/stock/tcehy#OTC">TCEHY</a>) (OTC: <a class="ticker" href="https://www.benzinga.com/stock/tctzf#OTC">TCTZF</a>) and JD.com (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/jd#NASDAQ">JD</a>) all hit fresh year-to-date lows after more bank analysts downgraded their target prices for the stocks. In the case of JD.com, shares hit an all-time low as well.
So far, 8 banks have <a href="https://www.scmp.com/business/markets/article/3238117/goldman-icbc-trim-targets-alibaba-jdcom-red-flags-chinas-corporate-earnings-season" style="color:#0563c1">revised</a> down price targets for Alibaba by between 2.2% and 9.8% lower, 12 banks have changed their annual targets for JD.com by between 7% and 39.2% down while HSBC plc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hsbc#NYSE">HSBC</a>) and Goldman Sachs Group Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gs#NYSE">GS</a>) have lowered their targets for Chinese tech giant Tencent by 3.4% and 1.9% lower, respectively.
<h3>The Doomsayers Vs. The Reality</h3>
Analyst comments range from disappointment about the Chinese sector&rsquo;s growth (&ldquo;Most of the tech companies may, overall, just have tepid revenue growth in the third quarter&rdquo; according to Forsyth Barr Asia&rsquo;s Willer Chen) to the China macro bears who think a bad period for Chinese growth recently will spill-over into profits (&ldquo;We expect corporate growth to stagnate following a deep contraction last year,&rdquo; Arthur Budaghyan, BCA&rsquo;s chief China strategist says).
The sentiment follows similar revisions by Citigroup Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/c#NYSE">C</a>) and the International Monetary Fund (IMF) about China&rsquo;s prospective pace of growth going into 2024. &nbsp;
But the latest data coming out of the Chinese economy Wednesday shows something of the opposite: growth is rebounding more than expected in spite of woes in the real estate sector. Third-quarter GDP grew much faster than expected at 4.9% while retail sales rebounded 5.5% in September, again significantly higher than analysts anticipated. Most thought growth for these two metrics would come in around the 4.7%-mark.
Payroll data in China was also encouraging, with unemployment down to 5% now, contradicting reports of a prospective four-fold higher rate of youth unemployment that is being rumoured about on bank desks.
That reinforces the picture of stronger domestic demand seen in the rising activity of Chinese manufacturers <a href="https://www.caixinglobal.com/2023-10-01/chinas-manufacturing-grows-on-stronger-domestic-demand-caixin-pmi-shows-102112969.html" style="color:#0563c1">reported</a> at the start of October and in the new surge in earnings of power companies on the mainland lately.
Marcella Chow, global market strategist at JP Morgan Asset Management, is one of those analysts who are bucking the trend of the doom-sayers. She wrote in a note Wednesday that contrary to reports of growth in the mid-4% range, the Chinese economy could bounce back significantly higher by the end of the year as a result of increased government stimulus efforts.
&ldquo;On the basis of very weak growth in 4Q2022, we believe the year-on-year growth rates will rebound in 4Q2023, and China could achieve the 5% annual growth target for 2023. That said, economic and market sentiment remain subdued, hence we continue to expect an escalation in policy support to boost expectations,&rdquo; wrote Chow.
Analysts haven&rsquo;t had a great track record this year: many of the big banks failed to predict the extent of the Chinese property market woes, with most forecasting a recovery in China and Hong Kong property prices during 2023 when the opposite has been the case.
In the same way but in reverse, they may now be neglecting to take into account the purchasing strength of the Chinese consumer, say contrarians. BYD Company Limited (OTC: <a class="ticker" href="https://www.benzinga.com/stock/byddf#OTC">BYDDF</a>) is a case in point &ndash; while <a href="https://www.benzinga.com/markets/penny-stocks/23/10/35268415/investors-think-chinas-number-one-ev-maker-byd-is-about-to-take-off" style="color:#0563c1">a few saw the company as potentially undervalued</a>, not many forecast the huge improvement in the EV maker&rsquo;s earnings it announced Tuesday in Hong Kong.
A Bloomberg analysis showed that while household savings were 34% of income in the third quarter this year vs. 35% the year before, they were also up significantly over 2019 when household savings represented just 32% of annual income as Chinese consumers have hoarded their savings in the downturn.
<h3>Oversold Consumption</h3>
All this data points to the possibility that analysts are being too bearish about Chinese consumer stocks, specifically the three that hit fresh lows this week.
Going by what the companies believe their own stock is worth, that certainly appears to be the case: Alibaba, Tencent and JD.com have been some of the biggest buyers of their own stock during this year&rsquo;s downturn.
Nikolaos Sismanis, executive director of Sismanis Researcxh &amp; Capital Ltd, says that for Tencent, which is trading at a forward P/E multiple of 15x after the company&rsquo;s earnings per share leaped around 25% year-on-year in the second quarter, to 3.975 RMB, or $0.53 per share, that&rsquo;s too cheap to pass on right now.
&ldquo;Considering the stock&#39;s substantial double-digit growth, formidable competitive moat, and unparalleled economies of scale, this multiple severely undervalues the stock,&rdquo; wrote Sismanis in a recent note.
Sismanis cites a familiar story among China stock investors today &ndash; that bearishness is not so much about core growth as it is about how global investors are ascribing value with respect to geopolitical risk attached to Chinese stocks.
&ldquo;The venture into Chinese equities poses a heightened level of risk for western investors compared to domestic securities,&rdquo; said Sismanis. &ldquo;This phenomenon isn&#39;t confined to Tencent alone but extends to numerous rapidly growing and highly profitable Chinese equities. Alibaba is a great example.&rdquo;
About Alibaba, bulls on the stock point out that the company <a href="https://www.benzinga.com/23/09/34949415/analysts-say-alibabas-lackluster-share-price-could-double-in-face-of-companys-rising-earnings-and-de" style="color:#0563c1">is probably priced at as much as half of its fair value</a>, given the company&rsquo;s dominant position among Chinese exporters.
For JD.com, a close competitor of Alibaba&rsquo;s, the stock price is too cheap to resist picking up here, say others. Geoffrey Seiler, a former analyst for $600 million asset manager Raging Capital and now an independent research analyst for global funds, is of such a view. With a forward P/E multiple of 8.5x earnings, JD.com is significantly cheaper than other companies in the sector, he says.
&ldquo;JD has gotten too cheap at this point,&rdquo; Seiler writes in a note published last week.
&ldquo;The stock is inexpensive, as are its Chinese e-commerce peers, and it should benefit from any recovery with the Chinese consumer. At the same time, its logistics unit is solid and one of the gems of the company.&rdquo;

BYDDF

HSBC

Are Analysts Getting Too Bearish On These 3 Chinese Consumer Stocks?

After a long hiatus in the dumps, Alibaba Group Holding Limited (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/baba#NYSE">BABA</a>) is coming back in view of some investors&rsquo; radars on the back of recent earnings announcements anddeals to further fortify its balance sheet.
While the company remains over 50% below its 5 year-ago valuation, with a P/E ratio in the teens and strong cashflow position, now may be the time to pick up the previously beleaguered shares, say analysts.
In August, Alibaba announced that its revenue was up 14% in the quarter ended June 30, to 234.16 billion RMB ($32 billion) while net income was 51% higher in the same period, rising to 34.33 billion RMB.
That gives the company a net margin of 14.6%, significantly higher than its US rival Amazon.com, Inc. (NASDAQ: AMZN) (5.02%) and more in line with China tech stock market darlings Baidu, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bidu#NASDAQ">BIDU</a>) and Tencent Holdings Ltd (OTC: <a class="ticker" href="https://www.benzinga.com/stock/tctzf#OTC">TCTZF</a>). &nbsp;
&ldquo;The results, in our view, demonstrated BAB&rsquo;s early-stage success in Taobao and Tmall business transformation to focus on quality user growth and better user retention through product supply and merchants ROI enhancement,&rdquo; <a href="file:///Users/admin/Desktop/H3_AP202308111594141606_1.pdf" style="color:#0563c1">wrote</a> Saiye He, a tech research analyst at Chinese bank CMB International in an August note.
CMB put a price target of $156.60 on Alibaba&rsquo;s stock, nearly double the current value of the shares. The target echoed another improvement by Nomura in January, which <a href="https://www.marketscreener.com/quote/stock/ALIBABA-GROUP-HOLDING-LIM-17916677/news/Nomura-Adjusts-Alibaba-Group-Holding-Price-Target-to-138-From-110-Maintains-Buy-Rating-42700867/" style="color:#0563c1">raised</a> its price target for Alibaba&rsquo;s shares to $138 from $110 previously.
At 19x earnings, Alibaba trades at a fraction of the price as does Amazon and other AI giants with which it is increasingly competing such as Nvidia Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>), despite showing a similar profit margin to the latter.
This premium may go higher if Alibaba&rsquo;s proposed radical restructuring gets underway under the company&rsquo;s new CEO Eddie Wu, who took the helm in June this year. Wu intends to divest Alibaba&rsquo;s subsidiaries to unlock the company&rsquo;s cash and beef up its investment in tech.
In the past week, Alibaba announced that it is selling 50% of its shares in its logistics subsidiary Cainiao Smart Logistics Network Limited in a $1 billion IPO on the Hong Kong Stock Exchange.
There are five other five business units Alibaba said in March that it would spin off. These are its cloud subsidiary, Taobao.com &ndash; which is China&rsquo;s largest online shopping mall, its e-commerce division, its local services group and its sprawling digital media and entertainment group. Together, sales of each of these subsidiaries could represent billions in additional cash for Alibaba which, if invested in high-margin technology could elicit a big pure play valuation for its shares, Macquarie Capital&rsquo;s Ellie Jiang <a href="https://www.youtube.com/watch?v=3z0z96J5XPQ" style="color:#0563c1">told</a> CNBC last month.
Naturally, investing in Alibaba&#39;s shares is not without its risks. Chinese consumption <a href="https://www.nytimes.com/2023/07/31/business/china-economy-consumer-stimulus.html" style="color:#0563c1">remains</a> weaker-than-hoped-for after being hit hard in the Covid-19 pandemic.
Furthermore, any deal-making activity that Alibaba intends to pursue will also be contingent on market strength in Hong Kong going forward, which is far from guaranteed. Year-to-date, Hang Seng Index is 20% lower after being hit hard by rising defaults of property developers on the mainland. China&#39;s property market in particular, where the bulk of Chinese savings are invested, may dampen the outlook for consumer-driven tech stocks like Aliaba.
Still, Jiang brushed aside these concerns, citing the attractiveness of the company&#39;s financial position and its valuation vs. that of its competitors.
&ldquo;It&rsquo;s all about catching up the growth against the industry,&rdquo; Jiang said. &ldquo;We anticipate that all of Alibaba&rsquo;s business units will be able to provide that growth into the next few quarters.&rdquo;
Alibaba&rsquo;s e-commerce division is widely seen as the next potential spin-off. In its Q1 earnings report, Alibaba said the unit had 17.14 billion RMB ($2.35 billion) of revenue, up 60% of the previous quarter year-on-year. A sale of that division could net the company a sizeable amount of cash, she said.
Other analysts concur. Bluesea Research strategists points out that Alibaba&rsquo;s forward earnings multiple is just under 10x, which makes it one of the few potential bargains in the tech space right now.
&ldquo;This is a massive discount to other stocks like Apple which are trading at close to 30 times their forward PE multiple,&rdquo; the analysts wrote in a note. &ldquo;If Alibaba is able to show further margin improvement, we could see a strong bullish momentum build for the stock.&rdquo;
Disclosure: Author holds no stocks mentioned in this story. &nbsp;

BIDU

NVDA

Analysts Say Alibaba's Lackluster Share Price Could Double In Face Of Company's Rising Earnings And Deal Driven Strategy

Alibaba Group Holding Ltd (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/baba#NYSE">BABA</a>), Nvidia Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>), Tesla Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tsla#NASDAQ">TSLA</a>), and Clover Health Investments Corp (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/clov#NASDAQ">CLOV</a>) were the stocks that saw high interest on r/WallStreetBets or WSB at press time in early hours of Friday.
What Happened: S&amp;P SPDR 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>), an exchange-traded fund, was the most discussed name on WSB with 1065 mentions, followed by the Jack Ma-led Alibaba at 408.
See Also: <a href="https://www.benzinga.com/money/how-to-buy-alibaba-stock/" style="text-decoration-line:none">How To Buy Alibaba (BABA) Stock</a>
Nvidia, Tesla, Cloverhealth, and ContextLogic Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/wish#NASDAQ">WISH</a>) &mdash; doing business under the name of Wish.com &mdash;&nbsp;attracted 226, 181, 145 and 119 mentions, respectively.
Some other trending names on the Reddit forum included AMC Entertainment Holdings Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/amc#NYSE">AMC</a>), Amazon.com, Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>) and Corsair Gaming Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/crsr#NASDAQ">CRSR</a>).
Why It Matters: On Thursday, Alibaba shares fell in tandem with other major Chinese companies such JD.com Inc (NASDAQ: JS), Baidu, Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bidu#NASDAQ">BIDU</a>), Tencent Holdings Ltd (OTC: <a class="ticker" href="https://www.benzinga.com/stock/tcehy#OTC">TCEHY</a>) (OTC: <a class="ticker" href="https://www.benzinga.com/stock/tctzf#OTC">TCTZF</a>), and Bilibili Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bili#NASDAQ">BILI</a>) on fears of a <a href="https://www.benzinga.com/news/21/08/22571830/alibaba-baidu-jd-com-tecent-bilibili-stocks-lose-further-ground-amid-regulatory-crackdown" style="text-decoration-line:none">regulatory crackdown</a>.&nbsp;
See Also: <a href="https://www.benzinga.com/trading-ideas/long-ideas/21/08/22584993/is-alibaba-stock-about-to-rebound" style="text-decoration-line:none">Is Alibaba Stock About To Rebound?</a>
Nvidia shares bounced on Thursday after the chipmaker announced <a href="https://www.benzinga.com/news/earnings/21/08/22580080/why-nvidia-shares-are-trading-higher-today" style="text-decoration-line:none">better than expected second-quarter earnings</a> reporting earnings per share of $1.04, which beat estimates of $1.02 per share.
Quarterly revenue is expected at $6.8 billion (plus or minus 2%) compared with the estimated $6.53 billion.&nbsp;
Multiple analyst firms raised price targets for Nvidia following the release of numbers, some of which include Keybanc, Needham, Barclays, Credit Suisse, and Mizuho.
Tesla was slated to hold its &ldquo;AI Day&rdquo; on Thursday an event in which it announced the introduction of the &ldquo;Tesla Bot&rdquo; &mdash;&nbsp;a humanoid robot whose prototypes are slated for next year. The event&rsquo;s <a href="https://www.benzinga.com/news/21/08/22589098/tesla-to-make-humanoids-with-prototype-slated-for-next-year-says-elon-musk-and-other-live-updates-fr" style="text-decoration-line:none">live blog was carried by Benzinga.</a>
Read Next: <a href="https://www.benzinga.com/news/21/08/22550010/tesla-vehicle-on-fire-required-40-times-more-water-than-gas-run-vehicles-say-firefighters" style="text-decoration-line:none">Tesla Vehicle On Fire Required 40 Times More Water Than Gas-Run Vehicles, Say Firefighters</a>

Short Ideas

AMZN

BILI

CLOV

CRSR

TSLA

WISH

Alibaba, Nvidia, Clover Health, Tesla, Wish And More — Stocks WallStreetBets Is Eyeing Today

<ul>
<li>China&rsquo;s Beijing Teenagers Law Aid And Research Center has prosecuted&nbsp;Tencent Holdings Ltd&nbsp;(OTC: <a class="ticker" href="https://www.benzinga.com/stock/tcehy#OTC">TCEHY</a>) for alleged unsuitable content for minors in the game developer&rsquo;s flagship video game, Honor of Kings,&nbsp;<a class="editor-rtfLink" href="https://www.reuters.com/technology/tencent-sued-over-inappropriate-content-honor-kings-game-2021-06-01/" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">Reuters reports</a>.</li>
<li>The suit coincided with China&rsquo;s unprecedented&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/news/21/04/20855130/after-alibaba-tencent-set-to-face-antitrust-fine-in-china-report" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">antitrust crackdown</a>&nbsp;on leading Chinese tech companies, including Tencent.</li>
<li>Reportedly, Tencent had reduced the minimum age limit for the game from 18 in 2017 to 12 in 2021.</li>
<li>Low-cut clothes worn by the game characters and altered storyline with historical figures have triggered the lawsuit.</li>
<li>An in-game lottery was likely to get the youth hooked to the game for a longer duration.</li>
<li>Chinese authorities have sought to limit teenage gaming hours, citing eye damage concerns.</li>
<li>The Honor of Kings game had 100 million daily active users globally in Nov. 2020.</li>
<li>Price action:&nbsp;TCEHY shares traded higher by 3.42% at $81.06 on the last check Tuesday.</li>
</ul>

Legal

Media

China's Interest Advocacy Group Sues Tencent for Alleged 'Inappropriate' Content In Honor Of Kings Game: Reuters

The video game company Roblox Corp&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/rblx#NYSE">RBLX</a>) received its first analyst reports after going public on March 11 with the first wave of observations&nbsp;mostly very positive about the company&#39;s future.
The San Mateo, California-based company, which accommodates 32.6 million daily active users on its global online platform during 2020, started trading at $45 a share and hit a high of $79.10 on March 17. The company&nbsp;is predicting 2021 revenue in the range of $1.44 billion to $1.52 billion, which would represent year-over-year growth between 56% and 64%.
Roblox expects to end 2021 with 34.6 million to 36.4 million daily active users, representing year-over-year growth of 6% to 12%.
Bank of America Analyst&nbsp;Reacts: Ryan Gee, research analyst at Bank of America Securities, pointed out that Roblox was the No. 1&nbsp;mobile app in the U.S. during 2020 and said the platform &quot;combines the communication utility of social networks (TikTok, SNAP) with the monetization/engagement of AAA gaming (Fortnite, Call of Duty, GTA Online), and has democratized content creation such that any user is a creator (Unity, YouTube, Twitch).&quot;
Gee added that the platform&#39;s distinctive qualities &quot;offers mobile exposure with less-relative capital risk than what we associate with traditional content creators.&quot; While raising concerns of a potential deceleration in a stronger economy and the challenge to attract both older and global users, he noted the strong stock performance reflected &quot;potential growth opportunities and margin expansion ahead.&quot;
Morgan Stanley Analyst&nbsp;Reacts: Brian Norwalk, equity analyst for Morgan Stanley, wrote that the company was &quot;still in the early innings of its user opportunity,&quot; as its daily active user base covers only 6% of the roughly 500 million potential players in the countries where it is active, adding that a &quot;21% &#39;20-&#39;24 CAGR user growth ahead&quot; would only raise that level to 14% by 2024.
Looking forward, Norwalk stated that Roblox faced a challenge in maintaining safety standards for the 55% of its current base that is under the age of 13.
But he also highlighted a pair of major opportunities that could bring the company to the next level: a successful launch and expansion in China through a joint venture with Tencent Holdings Ltd&nbsp;(OTC: <a class="ticker" href="https://www.benzinga.com/stock/tctzf#OTC">TCTZF</a>) and the ratcheting up of advertising opportunities on its platform.
&quot;By combining faster user growth in existing geographies, a successful launch in China, and the integration of advertising, our bull case contemplates $8.0bn/$2.9bn of total &#39;24 bookings/EBITDA, ~70%/~150% above our base case estimates,&quot; Norwalk wrote.
Goldman Sachs Analyst&nbsp;Reacts: Michael Ng, analyst with Goldman Sachs, shared Norwalk&#39;s optimism for the Chinese market&#39;s impact on Roblox. He also detailed how the company&#39;s enabling of user-generated content &quot;effectively allows RBLX to outsource game 
development costs to its creators while retaining the economic upside with a diversified portfolio of content, reducing hit-risk.&quot;
Ng also praised the diverse range of content on its platform, which could broaden its appeal to wider audiences.
&quot;Notably, RBLX&#39;s platform includes content developed by individual creators and video game studios, as well as non-endemic businesses such as film/TV studios (e.g., Warner Bros., Netflix) and musical artists (e.g., Lil Nas X), which demonstrate the use case for non-gaming general entertainment that should broaden the appeal of the Roblox platform,&quot; he wrote.
RBLX Ratings and Price Targets: Gee initiated a Buy rating and a $78 price target.
Norwalk initiated an Overweight rating and an $80 price target.
Ng initiated a Buy rating and an $81 price target.
At last check, Roblox was trading at $70.26, up 5.08%.
(Photo courtesy Roblox.)

Price Target

Initiation

RBLX

Roblox Stock Impresses Analysts: Here's Why

HUYA

JOYY to Sell 30M HUYA Shares to Tencent for $810M Cash

DouYu International Holdings Limited (&quot;DouYu&quot; or the &quot;Company&quot;) (NASDAQ:<a class="ticker" href="/stock/DOYU#NASDAQ">DOYU</a>), a leading game-centric live streaming platform in&nbsp;China&nbsp;and a pioneer in the eSports value chain, today announced that its Board of Directors (the &quot;Board&quot;) has received a preliminary non-binding proposal letter, dated&nbsp;August 10, 2020, from&nbsp;Tencent&nbsp;Holdings Limited, proposing that DouYu and HUYA Inc. (&quot;Huya&quot;) (NYSE:<a class="ticker" href="/stock/HUYA#NYSE">HUYA</a>) enter into a stock-for-stock&nbsp;merger,&nbsp;as a result of which Huya or its subsidiary would acquire each outstanding ordinary share of DouYu (including ordinary shares represented by American depositary shares) (the &quot;Proposed Transaction&quot;). Pursuant to the Proposed Transaction, shareholders of DouYu will receive a to be agreed number of newly issued Class A ordinary shares of Huya for their respective DouYu shares. A copy of the proposal letter is attached hereto as Exhibit A.
The Board plans to review and evaluate the Proposed Transaction. The Board cautions the Company&#39;s shareholders and others considering trading the Company&#39;s securities that the Board has just received the proposal letter and has not had an opportunity to carefully review and evaluate the Proposed Transaction or make any decision with respect to the Company&#39;s response to the Proposed Transaction. There can be no assurance that any definitive offer will be made, that any definitive agreement will be executed relating to the Proposed Transaction or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

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