Down $78 Billion in Value, Tencent Faces Worst Margins Ever
- Profitability predicted to drop to lowest level since 2003
- Spending has increased amid competition with rival Alibaba
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After the giddy heights of January when its shares hit an all-time high, Tencent Holdings Ltd. has shed $78 billion in value as investors price in the costs of the Internet giant’s massive spending spree.
Results on Wednesday are expected to show that rising costs and investments will hurt profitability at Asia’s biggest listed company. While Tencent has said sacrificing margins in the short-term is necessary to anchor future growth, analysts are concerned that the company isn’t yet able to make enough money from its mobile games to offset a decline in the desktop unit, its most profitable platform.