over 2 years ago • 3 mins
Tencent posted mixed results on Wednesday, as the Chinese government forces the emotionally distant tech giant to finally take on its fair share of child care.
What does this mean?
Like Whitney, China believes that children are our future. So in order to teach them well and let them lead the way, the country’s government banned for-profit after-school tutoring last quarter, as well as introduced stricter limits on how long they can play video games – both of which, it argued, were having detrimental effects on kids’ wellbeing.
Tencent knows how they feel: the company – which sells advertising space in its apps and online games – saw its ad revenue grow just 5% compared to the same time last year, as education companies collapsed and kids’ laser-like focus faded. And while its fintech and business services segment – which includes instant messaging app WeChat – posted strong growth, the damage was already done: Tencent’s overall revenue climbed by a weaker-than-expected 13% – the slowest quarterly growth since the company hit the stock market in 2004.
Why should I care?
For markets: China’s still on the agenda.
Most Chinese tech giants’ stocks are listed in the US or Hong Kong, so investors – nervous about government crackdowns on foreign-listed domestic companies – have been steering well clear lately. They’ve not sworn off the country altogether, mind you: data out this week showed international investors were holding around $560 billion worth of Chinese-listed stocks at the end of last quarter – 30% more than the same time last year.
Zooming out: There are bigger fish to fry.
The Chinese government’s mood probably isn’t about to improve: new data has shown that the prices manufacturers pay for materials accelerated by its fastest pace in 26 years last month, as the country continues to be rocked by power and commodity shortages. Those higher costs will probably be passed onto consumers, put a dent in consumer spending, and, ultimately, hamper the country’s economic growth.
Keep reading for our next story...
Coinbase reported weaker-than-expected results late on Tuesday, after America’s biggest cryptocurrency exchange struggled with that all-too-familiar summertime slump.
What does this mean?
Coinbase’s performance – and here’s the sort of hot-button analysis you come to Finimize for – depends heavily on the performance of cryptocurrencies. And given that the prices of those digital rascals dipped last quarter, the company saw the average number of active monthly users and the value of their trades drop by around 16% and 29% respectively versus the quarter before. That in turn pushed the company’s overall revenue down by a worse-than-expected 39%. Coinbase did say it’s expecting things to pick up again this quarter, and the early signs look good: bitcoin hit record highs earlier this week. But investors aren’t the forgiving type, and they sent its stock down 13%.
Why should I care?
The bigger picture: G2G, BTC. U OK, NFT?
Bitcoin has always had a big influence on Coinbase’s revenue – arguably too big, which is why the company’s been trying to wean itself off its reliance on the OG crypto. It seems to be succeeding: 19% of all trades were on bitcoin last quarter, down from 32% the same time last year. That also means it’s expanding into new revenue sources, with the company announcing plans last month to launch a dedicated NFT platform.
Zooming out: What goes up…
After the update, Coinbase’s stock was sitting 20% below its price when it first listed on the stock market. Rivian, then, will be hoping not to follow in its footsteps: the US electric truck-maker made a barnstorming stock market debut on Wednesday, raising nearly $12 billion in the sixth-biggest IPO ever on an American exchange. That valued the Amazon-backed company at $76 billion, which, on the one hand, makes sense: it’s already seen massive demand, with more than 150,000 preorders. On the other hand, it’s just nuts: the vehicle-maker hasn’t actually sold a single vehicle yet.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.