Tencent Holdings Limited (OTC: TCEHY), founded in 1998 and headquartered in Shenzhen, China, is an investment holding company, provides value-added services (VAS) and Online advertising services in Mainland China and internationally. The company operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. It offers online games and social network services; FinTech and cloud services, and online advertising services, such as media, social, and others advertisement services. The company is also involved in production, investment, and distribution of films and television programs for third parties, as well as copyrights licensing, merchandise sales, and other activities. In addition, it develops software; develops and operates online games; and provides information technology, information system integration, asset management, online literature, and online music entertainment services.
Tencent’s online advertising and fintech and business services segments generates accelerating revenue growth. Its online advertising revenues, streaming media services, games, and other apps rises 22% year over year to $3.8 billion,
Tencent attributes the segment’s growth to higher demand for ads across the online education, e-commerce, and fast-moving consumer goods sectors, as well as its consolidation of Bitauto, which is the online auto marketplace it took private last year.
Tencent’s fintech and business services revenue, which primarily comes from its online payment platform WeChat Pay and its cloud infrastructure platform Tencent Cloud, rises 29% year over year to $5.9 billion, It attributes that acceleration to the growth of its commercial payment and wealth management services, the consolidation of Bitauto’s business services, and the expansion of its cloud services.
Tencent has evolved into a major investor in other internet and technology companies. This includes stakes in Pinduoduo, Sea Limited, HUYA, Snap, and even Tesla, just to name a few. These investments are a ticket to growth far beyond Tencent’s own core markets.
Tencent is an attractive growth stock because it dominates China’s gaming and social media sectors.