by winston » Tue Jun 11, 2019 4:10 pm
not vested
Chinese stocks to sell: Tencent (TCEHY)
% Off Highs: 33%
YTD Return: 3%
One of China’s largest digital advertisers is Tencent (OTCMKTS:TCEHY), and while TCEHY stock has favored better than its digital ad peers lately, the stock has not been immune to the digital ad slowdown.
Tencent is at the epicenter of China’s digital economy, operating the company’s largest social networks, streaming platforms, online gaming websites and payment apps, among other things.
Through its various services, Tencent employs various business models, and generates revenue from various sources. One of those sources is digital advertising. But, the digital ad business isn’t a huge component of Tencent. Last quarter, online ads accounted for less than 16% of total revenues.
A year ago, that digital ad business was growing at a 55% rate. Last quarter, it grew at just a 25% rate. That’s a big slowdown.
But, because the digital ad business is just one piece of the pie at Tencent, the company has been able to better weather that digital ad slowdown than its peers. Further, at 25% growth, Tencent’s digital ad business is still doing pretty well.
Overall, TCEHY stock looks like one of the best China ad stocks to buy on weakness. This company’s ad business is still growing at an impressive 20%-plus rate, and revenue diversity limits Tencent’s exposure to further weakness in the digital ad market.
Source: Investor Place
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