technology

Tencent Investors Get Reality Check as Stock Falls After Results

Tencent Warns Spending to Weigh on Margins

It wasn’t business as usual for Tencent Holdings Ltd. on Thursday.

Shares of the tech giant slid as much as 4.6 percent in Hong Kong, defying a well-established trend of gaining after the company’s earnings announcements. While analysts for the large part remain bullish on the stock, Citigroup Inc. cut its price target and Credit Suisse Group AG reduced its earnings forecast after Tencent said margins will likely be squeezed as it invests more in content and technology.

Prior to Thursday’s drop, Tencent on average rose 1.8 percent the day after quarterly earnings in the past five years, comfortably beating the Hang Seng Index’s 0.1 percent average return on those days, data compiled by Bloomberg show. Tencent was down 3.8 percent at HK$445 at 2:50 p.m. in Hong Kong. Its last post-earnings drop of this size came in March 2013.

Though the shares have slid 5 percent since last Thursday’s close, Tencent remains one of the top performers on the Hang Seng Index over the past year, during which it has doubled in value. Out of 48 analysts tracked by Bloomberg, 45 have buy ratings on the stock and three recommend hold, while nobody says sell. The average 12-month price target is HK$508.41.

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