Chinese videogame maker and social media company reported first-quarter earnings of 135.5 billion yuan, missing analysts’ forecasts.
Tencent’s net income (ticker: TCEHY) stood at 23.41 billion yuan, down 51% from a year earlier.
Analysts surveyed by Factset expect revenue of about 141 billion yuan and a first-quarter profit of about 28.5 billion yuan.
Tencent’s American Depository Receipt was down 3% at $ 45.38 on Wednesday.
Tencent says online advertising fell 18% to 18 billion yuan in the first quarter. For the second quarter so far, the agency said “overall advertising sentiment was weak” as advertisers significantly reduced their spending.
“During the challenging first quarter of 2022, we implemented cost control initiatives and rationalized some non-core businesses that would enable us to achieve a more optimized cost structure going forward,” said Ma Huateng, chairman and chief executive, in a statement.
Earlier this week, Tencent raised their rating from underweight to overweight in March. The JPMorgan team, led by Alex Yao, has turned positive on several internet stocks in the weeks since the sector was described as “uninhabitable” for the next six to 12 months.
Yao wrote that since the policy developments in March, the attitude of investors in China’s Internet sector has improved significantly. He cited Vice Premier Liu’s statement on a pro-economic growth statement, which promised to support the economy and financial markets after a sharp sell-off.
Write to Joe Welfel at [email protected]