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Tencent’s Solid Earnings Come as Relief, for Now

Chinese internet giant Tencent reported better-than-expected earnings for the first quarter: Net profit increased 61% while revenue rose 48%, driven by online games and advertising. Facebook-like ads on WeChat’s timeline page boosted the company’s ad revenue. 

The strong first-quarter performance may take some pressure off Tencent, given that investors and analysts have become more anxious about the company’s outlook. Its stock has underperformed that of its archrival Alibaba this year.

But living up to investor expectations for the rest of this year won’t be easy. For example, it is unclear how long Tencent’s Honor of Kings, which has been a huge hit since last year, can continue to be the main source of growth. The company is still figuring out how to cash in on the popularity of another blockbuster game PlayerUnknown’s Battlegrounds. 

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