Tencent Stocks Tumble after Profit Dropped for First Time in 13 Years

One of China’s largest technology companies, Tencent Holdings Ltd., published its quarterly results on August 15, showing a year-over-year profit drop for the first time in 13 years.

Tencent‘s profits for the second quarter of 2018 fell 2 percent year-on-year to 17.87 billion yuan ($2.59 billion), while its revenue grew by at 30 percent, the slowest pace in three years, to reach 73.68 billion yuan. Although gaming revenue made up 40 percent of the revenue, it is also the business line that is causing the financial woes.

SEE ALSO: Toutiao Fights Back by Suing Tencent for 90 million

The poor financial results sent the opening price of the Hong Kong stock down by another 4.76 percent compared to the closing price from yesterday. Tencent has lost close to a third of its market capitalization, or around $170 million since its peak in January, but it remains as one of the largest public company in Asia with a market capitalization of nearly $400 billion.

“The only problem that we have is that one of our biggest games, PUBG Mobile, is not monetizing. This is something which is a little bit out of (our) control,” said Martin Lau, the company president.

PUBG, which stands for Player Unknowns’ Battleground, is one of the most popular games in China and worldwide, with more than 400 million players internationally. Tencent has not been approved by regulatory bodies in China to start charging for this game.

Tencent is only one of the companies affected in the gaming sector. The State Administration of Radio and Television (SART) responsible for games and other entertainment content has not issued any new licenses for game releases in China since March 2018.

Tencent stock also took a tumble when it was asked by the SART to take off “Monster Hunt: World Wide”, a popular game worldwide earlier this week. It came only a week after its release due to “not exactly compliant” content of the game, according to Lau.