Tencent Has Lost $62 Billion Which Could Wipe Out The Value Of Its Fintech Business. Tencent Holdings Ltd. shares fell a second day on concern regulators are now turning their sights to Pony Ma’s business empire, fueling a $62 billion wipe-out that one brokerage says obliterated most of the value of its online finance business. “All else equal, we think it could be argued that Tencent’s fintech business is now valued at almost zero. This is significant, as it implies any further declines from here would essentially imply a de-rating of the Tencent multiple.” the Bernstein analysts wrote in a research report, citing Friday’s loss.
According to Bloomberg, the stock fell more than 4% in Hong Kong on Monday, following a 4.4% drop on Friday. China’s top financial regulators see Tencent as the next target for increased supervision after the clamp down on Jack Ma’s Ant Group Co., people with knowledge of their thinking have said, like Ant, Tencent will probably be required to establish a financial holding company to include its banking, insurance and payments services, according to one of the people.
“Ultimately, though we consider the regulatory risk that Tencent faces in a very different light to the situation facing Alibaba. We consider Tencent top management’s low public profile helpful on the margin. More importantly, we’d argue Tencent’s competitive position in its main businesses remain very solid, with relatively few obvious competitors in core profit-driving businesses.” the Bernstein analysts reported.
Tencent Holdings Ltd., also known as Tencent, is a Chinese multinational technology conglomerate holding company. Founded in 1998, its subsidiaries globally market various Internet-related services and products, including in entertainment, artificial intelligence, and other technology. Tencent was founded by Pony Ma, Zhang Zhidong, Xu Chenye, Chen Yidan and Zeng Liqing as Tencent Inc. Incorporated in the Cayman Islands. Initial funding was provided to it by venture capitalists.
According to estimates by Bernstein analysts, including Robin Zhu, the internet giant’s payments and fintech business is worth between US$105 billion to US$120 billion. It was assigned a multiple of up to 8 times to the division’s trailing 12-month revenue of 100 billion Yuan (US$15 billion). That would imply the payments business is worth about US$70 billion to US$80 billion, with credit, wealth management and insurance accounting for the remaining US$35 billion to US$40 billion.