Tencent (TCEHY,$44.25) disappoints on Q1 revenue
Tencent posted its first quarter results, where revenue across all business segments slipped -0.12% from the year-ago quarter to 135.47 billion yuan —below FactSet consensus estimates for 140.82 billion yuan. The Chinese company’s profit attributable to shareholders decreased by -23% from a year ago.
Revenue from the business segment that includes gaming (which is Tencent's largest source of revenue) experienced mild growth from the prior quarter and the year-ago period to 72.74 billion yuan in first quarter revenue. The segment was impacted by challenges from Beijing's restrictions on licensing new games and a slower growth in the international market.
Revenue from Fintech and business services segment (Tencent’s second-largest revenue driver) plunged by -10.8% quarter-on-quarter-- the first sequential drop since Q1 2020 when there was COVID-19 related lockdowns across a large part of mainland China. The segment grew by 10% from a year ago, but missed FactSet estimates by 3.41 billion yuan. It also showed a substantial slowdown from a 25% increase in Q4 2021.
Tencent’s mobile payment apps WeChat registered monthly active users growth (domestically and internationally) of +3.8% from a year ago to 1.29 billion users.
TCEHY in downward trend: price may drop because broke its higher Bollinger Band on September 26, 2024
TCEHY broke above its upper Bollinger Band on September 26, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options. The A.I.dvisor looked at 35 similar instances where the stock broke above the upper band. In of the 35 cases the stock fell afterwards. This puts the odds of success at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for TCEHY moved out of overbought territory on October 08, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 23 similar instances where the indicator moved out of overbought territory. In of the 23 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on October 15, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on TCEHY as a result. In of 112 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for TCEHY turned negative on October 11, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 44 similar instances when the indicator turned negative. In of the 44 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where TCEHY declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 63 cases where TCEHY's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where TCEHY advanced for three days, in of 266 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 207 cases where TCEHY Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.939) is normal, around the industry mean (10.901). P/E Ratio (16.393) is within average values for comparable stocks, (50.708). Projected Growth (PEG Ratio) (1.058) is also within normal values, averaging (3.441). Dividend Yield (0.007) settles around the average of (0.026) among similar stocks. P/S Ratio (5.461) is also within normal values, averaging (19.253).
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. TCEHY’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to slightly better than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. TCEHY’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 90, placing this stock better than average.
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