Tencent Holdings blasted past Facebook to become the world’s most valuable social media network operator by market capitalization on Tuesday. It now also ranks as the seventh largest company globally.
The Chinese online games and WeChat giant soared 4.5% to HKD 543.50, taking its market capitalization to just under HKD 5.2 trillion (USD 670 billion), compared to the American rival’s market value of USD 657.8 billion.
Tencent has rallied about 45% this year in Hong Kong, adding HKD 1.6 trillion in value to investors. Facebook gained about 14% in New York during the same time.
Just over two weeks ago, Alibaba, the e-commerce behemoth and owner of the South China Morning Post, ousted Facebook as the world’s sixth most valuable company. Alibaba’s market capitalization is about USD 677.4 billion.
American technology and internet companies have long been the world’s leaders. China’s growing innovation and clout in everything from digital payments and 5G development to online games and e-commerce are part of the raft of tensions rising between Washington and Beijing. It may have prompted Tencent into making an offer to privatize its search engine unit Sogou from the US market.
“With rising China GDP growth, we will see more and more Chinese companies entering the top 10 or top 100 companies,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. “This long-term trend will continue in the foreseeable future. However, the pandemic and worsening China-US relationship may make the situation complicated.”
Tencent’s ecosystem is stuffed with games, social networking, mobile payments, music and videos, as well as the cloud. Its WeChat social media, messaging, and mobile payments app has more than 1 billion monthly active users. The stock has clawed its way back from a disastrous 2018, when it faced a nine-month freeze on game approvals.
“You can barely get through a day without touching one of Tencent’s applications,” Vey-Sern Ling, senior analyst at Bloomberg Intelligence, said in an interview with the South China Morning Post earlier this year.
Tencent has 52 “buy” ratings, four holds, and no sells.
The stock may rise to HKD 651 over the coming 12 months, says Jefferies analyst Thomas Chong, who has the highest target price on the stock among analysts tracked by Bloomberg. It is also known for its hugely popular games, including Honor of Kings and Peacekeeper Elite. Chong calls Tencent a “global mobile games powerhouse.”
“Tencent looks well positioned to capture overseas expansion opportunities riding on solid execution in different game genres and operating over 480 mobile games,” he wrote last week as he boosted Tencent’s target price from HKD 592 the month before.
Tencent has offered to pay USD 9 each for the shares of search engine operator Sogou that it does not already own. The price represents a 57% premium to its closing level in New York on Friday. The company’s American depositary shares closed up 48% at USD 8.51 on Monday, valuing it at USD 3.3 billion.
Elsewhere in the market on Tuesday, Taiwanese chipmaker TSMC surpassed Visa as the world’s tenth-largest stock by market value.
Saudi Arabian Oil, better known as Aramco, is the world’s most valuable company, with a market capitalization of USD 1.75 trillion, followed by Apple at USD 1.61 trillion.
Tencent founder Pony Ma Huateng is China’s richest person and the world’s 20th wealthiest, with a fortune worth USD 52.2 billion, according to Bloomberg billionaire rankings. He is followed by Alibaba founder Jack Ma, who is the world’s 21st wealthiest person, at USD 50.5 billion.
This article was originally published in the South China Morning Post.