(Bloomberg) — The Covid-19 pandemic probably barely dented Tencent Holdings Ltd.’s growth, thanks to its dominance of online spheres from gaming to social media. Now that China’s industries are emerging from the worst of the outbreak, a bigger long-term threat may be the growing posse of challengers to its internet leadership.
The WeChat operator is expected to unveil an 18% revenue rise when it reports earnings Wednesday, offering investors the earliest glimpse into how China’s internet industry fared during a coronavirus-stricken first quarter. That would be down from 20%-plus gains in previous quarters but still decent, thanks to Tencent’s burgeoning cloud and finance services and a billion-plus entertainment-starved players confined to home.
Tencent’s value surged almost $50 billion since Covid-19 broke out, defying a global market rout and a record Chinese economic contraction. The stock climbed about 4% Monday to the highest in more than two years.
But once the dust settles, Tencent will have to contend with a renewed challenge from giants like Alibaba Group Holding Ltd. and ByteDance Ltd., which are increasingly encroaching on its turf. As in Silicon Valley years ago, when the biggest cash-rich players from Amazon.com Inc. to Facebook Inc. invaded each other’s territories, China’s largest tech companies can now resume expanding beyond their mainstay businesses and developing services from advertising to gaming and payments in direct competition with Tencent.
“These large internet platforms are ambitious, and they will try to leverage their scale to go into businesses which are not core to them,” said Bloomberg