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    TCEHY: Tencent’s Turnaround Potential

    By Wasim Omar

    Aug 19,2022

    2:28 AM UTC

    Stock for the Chinese investment holding company, Tencent Holdings Limited (OTCMKTS: TCEHY) has been capturing the interest of market traders, given its recent movements. Since the beginning of August, the stock has gained up to 7.2% in price in recent days. It is presently trading close to the $40 mark, which is what TCEHY was trading at in late 2018.

    Tencent’s Epic Rise and Epic Tumble

    The recent TCEHY rise comes as a delight to shareholders, given the stock’s prior performance throughout the year. Since the onset of 2022, TCEHY shareholders have seen their holdings depreciate in the market by almost 36%. Recent gains have brought down these losses to 32%. TCEHY has been strongly bullish from late 2018 to early 2021, tripling in price from $33 to $99. The stock began to bear the cost of the severe macroeconomic headwinds, resulting in declining YoY revenue figures. Digital advertising and gaming both saw double-digit declines in their recent most quarterly results. The quarter brought in the company’s first-ever revenue decline which indicated that the bearish sentiment around the stock is not disconnected from fundamentals.

    A Glimmer of Hope for TCEHY

    Despite these bleak fundamentals, TCEHY has risen by 7% since the start of August. This is primarily due to the belief that the present financial setbacks are due to short-term supply-chain and operational obstructions which link to Covid-related closures. Market participants remain confident that overselling of the stock has led to serious undervaluation. There also remains optimism that the stock is bound to power through present circumstances. Once the headwinds die down, Tencent’s business is likely to resume its rocketing growth trend. This view is shared by a number of China-focusing financial firms. These seem to be further contributing to the slight bullish turn seen in the stock’s price trend.

    Conclusion

    The past few years have seen TCEHY undertake a rapid and sustained bullish rise, followed by a downward correction, given prevailing headwinds. At present, the stock seems to be rallied upwards upon the view of it being undervalued, as a result of its overselling. Coupled with long-term optimism, the stock continues its gradually steady growth trend.

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