The Biggest Company You Never Heard Of! Social Media, Gaming, Entertainment, Artificial Intelligence
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Let me introduce you to…Tencent!
Ticker: TCEHY
Founded back in 1998, Tencent is a Chinese multinational company that has grown from humble beginnings into one of the world’s most valuable enterprises.
Tencent’s founder Ma Huateng, along with four friends, launched the company initially as an instant messaging service – think ‘Facebook Messenger’ but like 12 years prior.
At the time, there was nothing quite like it. Tencent essentially went from zero users to one million users in the first year! Crazy!
After a few years of solid growth, Tencent was then listed on the Hong Kong Stock Exchange in 2004, which is when the real growth started happening.
Over the next decade, Tencent developed some incredibly innovative services within the social media sector – most notably WeChat.
Some of you guys might have heard of WeChat before, but basically, it can be thought of as China's equivalent to Whatsapp or Facebook Messenger
However, unlike Whatsapp, WeChat has transformed into an all-in-one kind of service, It has all the features of Facebook Messenger, the usefulness of Venmo and Paypal, and a multitude of other utilities, where you can not only send messages and post updates to your wall, but also pay bills, order food, and even call taxis. Calling it only a messaging app or a social media platform doesn’t really do Wechat justice.
But that’s pretty Cool, right?
WeChat has become Tencent's premier platform and currently boasts…wait for it…1.2 BILLION active users.
However, you're probably thinking back to my overuse of the term conglomerate earlier and wondering where that all fits in.
Well, let me tell you.
WeChat is only one part of Tencent's operations. In addition to its social media interests, Tencent also has a huge stake in the video game industry.
I'm sure all of you have heard of Fortnite – whether your kids are playing it or whether you're playing it yourself, this game has been everywhere over the last few years.
And guess who has the majority stake in the company that produces Fortnite? Yup, you guessed it – Tencent.
Furthermore, Tencent also has business interests in the music industry, film industry, the investment sector, and even artificial intelligence!
As you guys can imagine, this company is HUGE – let’s dig a little deeper into what they do these days specifically.
The recent decrease in stock price has been tied to the rumblings of a change in China's antitrust laws, which could severely impact Tencent's operations.
These law changes are potentially be so detrimental, that Tencent’s stock price continued to slide even after the company announced a record-breaking 175% increase in profits for the last quarter of 2020!
The market seemed to focus more on the impact that these law changes might have than the incredible profit increases they reported!
So, what do I think about Tencent overall?
On the one hand, we have this huge company, operating in multiple sectors, that keeps seeing revenue and profit increases year-over-year.
But on the other hand, this company is facing a potentially massive roadblock in the form of law changes that could force them to downsize many elements of their business, such as online payments and even WeChat.
Personally, I think I may sit on the side-lines until the hype around these antitrust laws dies down. There is too much unquantifiable risk at this point for my taste.
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