Tencent surpasses Facebook in market value to join tech’s big five
Tencent Holdings has surpassed Facebook in market value, becoming the first Chinese technology company to join the ranks of the world’s five largest corporations.
Investors piled into the Chinese social networking major, extending this year’s rally to 127 per cent and boosting its market value by some US$292 billion as of Tuesday’s close. That year-long surge has made founder Ma Huateng the mainland’s second-richest man and lifted the entire Hong Kong bourse. The operator of the ubiquitous WeChat messaging service is now valued at $523bn, a whisker above Facebook’s $522bn on Monday.
Investors are betting that Tencent can lean on its billion-plus users and hit games such as Honour of Kings to evolve into an advertising and entertainment titan along the lines of a Google or Facebook.
Created almost two decades ago as a web portal before morphing into one of the world’s biggest purveyors of video games, the argument is that its dominance of Chinese social networking also bankrolls an expansion into newer markets from video streaming to finance.
Tencent’s climb, however, has stretched historical valuations. It is now trading at more than 50 times forward earnings, higher than an average of approximately 30 over the past two years. Of the four companies on the planet that are larger – Apple, Alphabet, Microsoft and Amazom – all but Jeff Bezos’ perennially margin-challenged e-commerce juggernaut are valued at much less. Tencent, which has no sell ratings, is now also just 2.4 per cent below the HK$440.64 (Dh207) average price target of 36 analysts surveyed, whereas they expect Facebook to rise another 16 per cent in the next 12 months.