Tencent Q2 Profit Surges Amid Trump’s Ban on Its WeChat

(Source: Lu Zhao/Pandaily)

Tencent on Wednesday announced its financial results for the second quarter of 2020, one of the fastest revenue-growing quarters in two years.

The company reported revenue of 114.9 billion yuan ($16.53 billion), an increase of 29% year on year. Net profit attributable to shareholders of the company was 30.2 billion yuan, up 28% year on year.

Thanks to coronavirus lockdowns worldwide, Tencent’s online gaming sector received a major boost in the second quarter. Though its PC game revenue fell over 6%, mobile game revenue increased 62% year-on-year to 35.99 billion yuan, thanks to mobile games such as “Peacekeeper Elite” and “Honor of Kings.” Overall, online game revenue contributed the most (34%) to Tencent’s Q2 revenue, growing by 40% year on year to 38.29 billion yuan.

“We utilized our platforms and technologies to help users adapt to the new normal via online tools, to support enterprises in conducting digital upgrades, and to broadly contribute to economic recovery,” said Ma Huateng, a.k.a Pony Ma, chairman and CEO of Tencent. “We are committed to investing in talent, technology and platforms in a disciplined manner to embrace the emerging structural opportunities and challenges ahead.”

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Last week, US President Donald Trump signed an executive order banning US transactions with Tencent’s WeChat, effective from Sept. 20.

“WeChat automatically captures vast swaths of information from its users,” Trump said. “This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.”

Though the scope of the WeChat ban remains to be seen, analysts say it would affect global businesses, not just Tencent. Tencent holds several investments in US video game, sports and media companies. Its game investments range from full ownership of games developer Riot Games to minor stakes in Activision Blizzard and Epic Games. The company also has a five-year, $1.5 billion streaming deal signed last July with NBA, one of the league’s most lucrative markets outside the US. Analysts also warned that Apple’s annual global iPhone shipments could decline by 25–30% if WeChat is removed from its App Stores.

As of June 30, WeChat had 1.206 billion monthly active users, Tencent said.

The Trump administration also announced plans in a separate order on the same day to ban TikTok and US transactions with its owner ByteDance, citing concerns over “national security.” ByteDance released a statement on Aug. 7 in response, threatening to resort to the American justice system in order to get “fair treatment.”

Tencent stock closed yesterday at $65.95 with a 1.63% rise.