Tencent's Investment Strategy Cools Off
Chinese tech giant Tencent (OTC: TCEHY) generates most of its revenue from the gaming, advertising, fintech, and cloud markets. However, it also generates over a quarter of its profits from its investments in public companies and private unicorns.
That massive portfolio, which had a fair value of 352.7 billion yuan ($50.5 billion) last quarter, includes stakes in over 700 companies. But at a company event in early 2018, Tencent president Martin Lau warned that its "hot summer" for investments in 2018 could be followed by a "cold winter" in 2019, due to "fewer opportunities in growing markets" and tougher competition in mature markets.
Therefore, it wasn't surprising that Tencent only invested in 108 companies in 2019, according to research firm IT Juzi, marking a 33% drop from its 162 investments in 2018. It also cut its annual investment spending by 53%, from 72.7 billion yuan ($10.4 billion) in 2018 to 34.3 billion yuan ($4.9 billion) in 2019. Let's see what this strategic shift means for Tencent's future.
Source Fool.com
