Last week, the tech world went in shock when Facebook lost $120 billion in a day, after its earnings report which missed expectations on revenue and showed slowing user growth.
It looks like the trend of big loss suffered by tech companies is being followed across the world and is not limited to one company (Facebook) or one country (the U.S.).
Tencent, the Chinese tech giant and one of the world’s biggest tech companies, is another company which is also on a losing spree and has tumbled 25 per cent since January, erasing about $143 billion of market value. Last month alone, the company witnessed its stock down by 9.8 per cent. The loss of $143 billion is also the biggest wipeout of shareholder wealth worldwide.
Its year-on-year profit growth also slowed to 5.1 per cent in the second quarter, the weakest pace since 2012.
Experts believe that tech companies have been enjoying fast profit growth in the past few years, so it will be difficult for them to maintain similar growth in the future as the competition grows and some segments are saturated.
They are, however, still bullish about the company’s growth in the near future and have buy recommendations about the company, with the average price target implying a 45 per cent gain over the next 12 months.
Amidst this, Tencent’s second-quarter earnings announcement is due on August 15, which might throw up a new result and change the direction of the stock graph for the company.
The Chinese tech giant is one of the prominent investors in India and has invested in companies such as Flipkart, Ola, Hike, Practo and others.
According to media reports, Tencent is also planning to invest in SoftBank-backed Oyo. The tech giant is planning to invest between $300 and $500 million at a valuation of over $2 billion in the hotel brand.
Besides, early this year, the Chinese Internet conglomerate also invested into Times Internet-owned music streaming platform Gaana. The Chinese firm also acquired a minority stake in the music streaming app.
Tencent is involved in a stiff battle with its Chinese counterpart Alibaba in India. Tencent strategically invests in companies in the country.
The continuous fall and loss suffered by the company is also heralded as a not-so-positive-sign for Indian tech companies.
The development was first reported by Bloomberg.