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Tencent Holdings (TCEHY) announced plans for a share buyback program after its fourth-quarter results missed earnings expectations. The company attributed some of the revenue decline to a slowdown in its gaming revenue segment, which has traditionally been a key growth driver.
Yahoo Finance’s Rachelle Akuffo and Akiko Fujita explain in detail.
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Editor’s note: This article was written by angel smith
video transcript
Rachel Akuffo: Let’s now switch gears and take a look at Tencent Holdings, which reports fourth-quarter results despite missing revenue expectations and suffering from a slowdown in its gaming business. This is something we continue to see here, as we see the stock price rising slightly as the company plans to more than double its share buyback program. Yes, many companies have announced some issues, some issues. The economic slowdown and some of its key industries are being affected here, and that combined with share buybacks will likely strengthen confidence in its future product roadmap. Akiko-san.
Akiko Fujita: Yeah, you’re certainly right about that. Tencent is certainly one of the companies that has been affected not only by the broader economic slowdown seen in China, but also by investor concerns about regulation in the gaming sector. Remember Tencent, the biggest game player here? If you recall last year’s announcement that gamers would be capping not only the amount of time they could play, but also essentially the number of prizes, there are limits.
There was a very big drop in December following this announcement with Tencent, especially due to concerns that it could have a big impact on the earnings picture for investors. Tencent reassured investors in a call today that they don’t necessarily think this is actually a positive, whether it’s a spin or not. Tencent stock has rebounded about 1%.
Rachel Akuffo: Sure, they talked about some of that gaming revenue. They also announced that several new games are coming in the pipeline. But clearly, a lot of people bought into the investment. I bought a bunch of these games and invested in them during COVID-19. I don’t really feel the need to keep spending money on these games. So we’ll continue to focus on that gaming market and what we can get from Tencent.
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