Tencent Doubles Buybacks to Over $12.8 Billion as Sales Miss

(Bloomberg) -- Tencent Holdings Ltd. plans to more than double its stock buyback program to at least $12.8 billion in 2024, mollifying investors concerned about a gradual dissipation of growth during a Chinese economic downturn.
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China’s largest internet company joins rivals from Alibaba Group Holding Ltd. to JD.com Inc. in ramping up dividends or share repurchases, a symptom of maturity in businesses that once led the nation in growth. Tencent on Wednesday reported a lower-than-expected 7% rise in revenue after gaming sales disappointed, particularly at home.
The results cast doubt over the growth trajectory of the world’s largest internet arena, which has yet to bounce back fully from years of regulatory and economic turmoil. Investors are grappling with mixed signals about the Chinese economy, which has struggled to regain its pre-Covid velocity. Beijing’s government is still contending with a plethora of structural problems from a property crisis to stubborn inflation.
After a quarter of sales contraction, gaming revenue should “improve” from the second quarter as it enhances games such as cash cow Peacekeeper Elite, President Martin Lau told reporters after the results. Executives also spent time talking about how AI was already helping boost ad revenue, though they didn’t quantify the impact.
“Tencent’s existing games could face challenges from some unique new titles in the market this year, as Chinese regulators increased the number of new commercial licenses they issued,” said Shawn Yang, senior research analyst with Arete Research.
“As for online advertising, Tencent benefits from the recovery of digital marketers in sectors like e-commerce and video games, but maintaining a high pace of growth could be difficult given the easier comparison they had last year in the post-Covid opening-up.”