With a market cap now slightly above $150 billion, the Chinese social networking and gaming firm is already larger than U.S. tech giants like Intel, Cisco Systems and Hewlett-Packard. And given Tencent’s shares on the Hong Kong Stock Exchange are up more than 25% since Jan. 1, if it keeps up the momentum, it could soon eclipse AT&T, which had a market cap at close Monday of $169 billion.
Though few outside of China use Tencent’s services, the company’s increasingly massive value shows it pays to be one of the kings of the Chinese Internet, which now has more Web and smartphone users than any other market in the world. The company’s scale, combined with its increasing ambitions abroad, also serve as a reminder that those who ignore the company do so at their own peril.
The most recent example of this came Tuesday in the form of a CLSA report valuing Tencent’s messaging application WeChat at $64 billion, or about three times the amount Facebook paid for WhatsApp. Though app developers outside Asia have said they see the many features in Asian chat apps as potential annoyances to users, CLSA analyst Elinor Leung argues games, advertisements, and e-commerce options mean Tencent has the ability to make around $3 per WeChat user, compared with the $1-per-user fee WhatsApp charges.
Though it remains to be seen just how much Tencent can make from WeChat, it has already begun adding mobile games, an online-payment tool, features that help users flag taxis or buy movie tickets, and even a platform for investing into a money-market like fund.
If those features start bringing in money over the next year—and Ms. Leung points out in her report that one Tencent-created game promoted on WeChat is reportedly making 200 million yuan ($32.6 million) per month—that could start to change the calculus for others like Facebook and WhatsApp.
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