Tencent and Alibaba have lost more value this year than any other company in the world

midian182

Posts: 8,138   +96
Staff member
Bottom line: US companies such as Meta, PayPal, and Amazon have seen their market caps crash this year as the world economy tumbles, but their losses pale in comparison to China's biggest tech giants, Tencent and Alibaba, which top the global charts when it comes to market value losses.

Bloomberg reports that Tencent, a company that almost became China's second trillion-dollar firm 18 months ago, is set to record its first quarterly revenue decline since the 2008 financial crisis. Much of its woes are down to slowing gaming sales and the country's crackdown on the industry.

After experiencing a boom time during the lockdowns when those stuck indoors embraced home entertainment like never before, video game sales have nosedived this year. Research firm Ampere Analysis predicts sales will drop by 1.2% in 2022 to $188 billion, and Sony lowered its profit forecast as fewer people buy PlayStation titles. Tencent is also dealing with player spending on its incredibly popular Honor of Kings mobile title declining for three consecutive months since May.

China's strict regulation of the video games industry 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 still hasn't received approval for some of its new titles. That's especially bad news in a country with the largest gaming market by revenue ($41 billion in 2020) and the most mobile gamers (655 million in 2021).

Tencent has stakes in a slew of big gaming companies, including 100% ownership of Riot Games, Sumo Group, and more. It also has part stakes in Epic Games, Supercell, Ubisoft, and several others.

Tencent's stock is down 60% since February 2022. According to Bloomberg, that's caused its value to crash by $564.1 billion, more than any other non-Chinese company in the world—Meta is the biggest loser outside of the country with a $302 billion loss.

Sitting behind Tencent on the list of biggest value drops is Alibaba. Its shares are down 65%, resulting in a $494 billion loss in market cap since February. The firm co-founded by Jack Ma recently reported the first flat revenue growth in its history.

Adding to the companies' problems is China's Covid Zero policy; the strict lockdowns are taking their toll on the country's and the world's economies. Reports of layoffs, something US firms have become accustomed to in these times, and fears of a recession are also having an impact. The rising tensions between China and the US aren't helping things, either—five of China's largest state-owned are delisting from US stock exchanges.

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Endymio

Posts: 1,801   +1,855
Good, nothing lost. China in general is on a downhill spiral as the façade of a strong economy is finally coming undone.
While I agree with your sentiment, the fact remains that China's economy is much more than a facade. They've gained control of many critical world industries ... if they take Taiwan, they're control a majority of the world semiconductor industry as well.
 

Theinsanegamer

Posts: 3,520   +5,926
"Covid zero" is policy? And here I thought they took my advice and started naming Coronavirus strains after video games.

It's really no surprise, china's vidya crackdowns are going to hit tencent hard, and their economey is still trying to absorb the failure of the real estate industry. China's real estate collapse was MASSIVE, trillions wiped out and a hundred million saw their savings annialated. The rest of their markets are going to smart after that.
While I agree with your sentiment, the fact remains that China's economy is much more than a facade. They've gained control of many critical world industries ... if they take Taiwan, they're control a majority of the world semiconductor industry as well.
Globalism has resulted in 0 extra capacity or redundancy in favor of the lowest price, and its going to screw us all.

That said, I dont taiwan is gonna happen anytime soon. China's military is boastful but actual engagements with india show them to still be paper tigers. Their carriers still use ramps and their "stealth" jet had the cross section of a barn door. It may happen, but likely not for another 20-30 years, enough time for other south asian countries to realise they can tcount on the west to help them and form their own military alliance....
 

RaXoR

Posts: 235   +179
While I agree with your sentiment, the fact remains that China's economy is much more than a facade. They've gained control of many critical world industries ... if they take Taiwan, they're control a majority of the world semiconductor industry as well.
I agree but I'd prefer the overall downfall and ultimate doom of certain businesses than having the Chinese government extend their control beyond China and influence things they should have no business influencing. I feel for the Chinese people but their government needs to cease to exist, take away the economy and they lose power.
 

yannus

Posts: 81   +67
Let's hope all big tech corporations go bankrupt and small businesses take back what they should have never lost and recreate new jobs.
 

gamerk2

Posts: 728   +696
Globalism has resulted in 0 extra capacity or redundancy in favor of the lowest price, and its going to screw us all.
I mean, that's Capitalism in a nutshell: Lower costs as much as possible in order to maximize profits. But yes, we're starting to see the effects of lacking both local production of core goods as well as the lack of excess capacity, and both are significant problems that require direct government intervention...

Except that's defined as "Socialism", so we likely won't and the current situation will continue indefinitely.
That said, I dont taiwan is gonna happen anytime soon. China's military is boastful but actual engagements with india show them to still be paper tigers. Their carriers still use ramps and their "stealth" jet had the cross section of a barn door. It may happen, but likely not for another 20-30 years, enough time for other south asian countries to realise they can tcount on the west to help them and form their own military alliance....

Eh, China can win in Taiwan simply through massive manpower advantages before the US can respond. And if anything, the situation in Ukraine (specifically, how US arms have all but stopped Russia's advances) combined with recent US overtures to Taiwan may force China to conclude they have to invade *soon* before the US can farther bolster it's defenses.
 

Sir Sparkles

Posts: 114   +64
Chinese Communist Party has been becoming increasingly paranoid and controlling of it's citizens and foreign nationals alike. There's been a major exodus of all foreigners due to policies making it impossible to live there. The backbone of their economy (70%) is a flimsy real estate ponzi scheme that has never been completed and is designed like NFT's.
It's all well and good until the people start fighting back. Which they are starting to do. The vast majority of Chinese people are not communists, but the ruling party will still crush them. No mercy.
Ah the joys of communism... it always ends the same way. It's a shame they drag their misery to other surrounding nations before the ultimate collapse though.
 

gamerk2

Posts: 728   +696
Chinese Communist Party has been becoming increasingly paranoid and controlling of it's citizens and foreign nationals alike. There's been a major exodus of all foreigners due to policies making it impossible to live there. The backbone of their economy (70%) is a flimsy real estate ponzi scheme that has never been completed and is designed like NFT's.
It's all well and good until the people start fighting back. Which they are starting to do. The vast majority of Chinese people are not communists, but the ruling party will still crush them. No mercy.
Ah the joys of communism... it always ends the same way. It's a shame they drag their misery to other surrounding nations before the ultimate collapse though.
I wouldn't be so sure. If the last century has shown us *anything*, is that people will willingly give up their free rights for physical and economic security. And thus far (post-Mao at least), China has by and large done that, hence why it's been relatively peaceful despite the fact its a one-party state.

I also note China hasn't been a Communist state since Mao died; it's been more of a one-party Socialist state that has used a combination of private ownership to spur new ideas, plus direct government funding to subsidize mass production of goods. Economically, it's been amazingly successful, and that economic success if why the majority of the population has remained faithful to the government (despite wishful thinking from the west wishing otherwise).