Why Tencent Stock Dropped Today
Shares of (OTC: TCEHY) were down 10.3% as of 12 p.m. ET Friday after Chinese authorities proposed new rules aimed at curbing excessive online gameplay and spending.
In a draft document released this morning, regulators from China's National Press and Publication Administration say they're seeking public comment on several new proposed restrictions for online gaming companies in the country. Among those restrictions are a ban on daily login rewards, lower recharging limits with warnings issued to users who exhibit "irrational consumption behavior," and requirements that game makers abstain from offering users high-value or expensive virtual transactions.
At a glance, Tencent has much to lose if these rules hamper its gaming business. The Hong Kong-based company offers so-called "mini-games" through its popular messaging and social media app WeChat, holds a roughly 40% stake in Fortnite creator Epic Games, and generated around 21% of its total revenue last quarter from its domestic games segment. Around 9% of Tencent's total revenue last quarter came from games outside of China.
Source Fool.com
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