Bottom line: US companies such as Meta, PayPal and Amazon have seen their market caps plummet this year as the global economy slumps, but their losses are small compared to China’s biggest tech giants, Tencent and Alibaba , which top the global rankings when it comes to market value losses.
Bloomberg reports that Tencent, a company that nearly became China’s second trillion-dollar company 18 months ago, is set to post its first quarterly drop in revenue since the 2008 financial crisis. to slowing game sales and the country’s crackdown on the industry.
After experiencing a boom during lockdowns when those stuck indoors embraced home entertainment like never before, video game sales have plunged this year. Research firm Ampere Analysis predicts sales will fall 1.2% in 2022 to $188 billion, and Sony has lowered its profit forecast as fewer people buy PlayStation titles. Tencent has also been dealing with declining player spending on its incredibly popular Honor of Kings mobile title for three consecutive months since May.
Strict regulation of the video game industry in China is exacerbating the sales problem. April saw the first ISBN license – required by China for developers to publish games on the mainland – granted since July last year, and Tencent has still not received approval for some of its new titles. This is particularly bad news in a country with the largest gaming market by revenue ($41 billion in 2020) and the largest number of mobile gamers (655 million in 2021).
Tencent has stakes in a host of major gaming companies, including 100% ownership of Riot Games, Sumo Group, and more. He also has stakes in Epic Games, Supercell, Ubisoft and several others.
Tencent’s stock is down 60% since February 2022. According to Bloomberg, this has knocked its value down $564.1 billion, more than any other non-Chinese company in the world. Meta is the biggest loser outside the country with a loss of $302 billion. .
Alibaba sits behind Tencent on the list of the biggest declines in value. Its shares are down 65%, resulting in a $494 billion market capitalization loss since February. The company co-founded by Jack Ma recently announced the first stable revenue growth in its history.
China’s Covid Zero policy adds to business problems; the strict shutdowns are weighing on the economies of the country and the world. Reports of layoffs, which American companies have become accustomed to in these times, and fears of a recession are also having an impact. Rising tensions between China and the US aren’t helping matters either – five of China’s largest state-owned companies are pulling out of US stock exchanges.