Tencent Traders Prep for Biggest Post-Results Move in 15 Months
Tencent Traders Prep for Biggest Post-Results Move in 15 Months
(Bloomberg) -- Tencent Holdings Ltd. traders are preparing for the stock’s biggest post-earnings reaction in more than a year.
The options market is pricing in a 2.9% move either way Thursday in the most valuable Asia-listed company, data compiled by Bloomberg show. Shares of the Chinese Internet giant, which releases third-quarter results after Wednesday’s close of trading, haven’t moved more than 2% on a post-earnings day since August 2018. They closed 0.9% lower Wednesday.
Tencent has yet to recover from last year’s regulatory clampdown on its gaming business, which wiped out as much $271 billion of shareholder value. While most analysts remain bullish, Blue Lotus Capital Advisors Ltd. in late October cut its recommendation on the stock, the first research shop in five months to do so, according to data tracked by Bloomberg.
“We see weakness in the next 6 months to one year,” said Shawn Yang, Blue Lotus Capital Advisors’s deputy head of research. The firm has a “hold” recommendation on the shares. “Between weakness in online gaming and uncertainty in its advertising business, we’re not very sure if there’s a certain catalyst going forward, at least in the near term.”
Yang’s team predicts Tencent’s third-quarter revenue will come in at 89.1 billion yuan, 10% lower than the Bloomberg-compiled average. Yang’s HK$331 price target is among the lowest among the almost 60 analysts covering the stock.
To contact the reporter on this story: Elena Popina in Hong Kong at epopina@bloomberg.net
To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, David Watkins
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