A string of share buybacks by Tencent Holdings Ltd. failed to revive investor confidence in the online gaming giant, whose shares are approaching 2018 lows.
Tencent, China’s most valuable company by market value, spent nearly $1 billion buying back shares in the past month, bringing this year’s total to $2.3 billion (16.2 billion yuan), the data showed. Tencent’s share repurchase pace began to pick up after major shareholder Prosus NV said at the end of June that it would gradually reduce its stake in Tencent.
According to foreign media calculations, although Tencent bought the company’s stock every day this month, its stock price has fallen by more than 60% from its peak in January 2021, and its market value has decreased by about 580 billion US dollars (about 4.1 trillion yuan), becoming the largest market in the world. The stock that has evaporated the most from global market capitalization since then. Factors such as macroeconomics have become the main obstacles facing Tencent.
Tencent’s buyback is difficult to reviews apps prevent the stock price from falling
“Tencent is under pressure from major shareholders to sell shares, and buybacks have worked, but not enough support,” said Banny Lam, head of research at CEB International Investment Corp. “It still needs some policy support from the government to be able to turn things around.”
Tencent’s second-quarter revenue suffered its first-ever decline as the company grappled with macroeconomic conditions affecting its main business. Despite the approval of the new game, investors remain skeptical about the company’s growth prospects and the sell-off of Prosus. Prosus said on September 8 that it had sold 1.1 million shares of Tencent, reducing its stake to 27.99%. A previous filing also showed that Prosus sold more than 3.9 million Tencent shares in the first half.
There are rumors that Tencent is considering divesting more of its sprawling portfolio in an attempt to fund a series of share buybacks and refocus its growth strategy. In this regard, Tencent responded that there is currently no plan or timetable for reducing its shareholding.