Consequences of the US decision for Tencent
Share value Tencent dropped immediately after the information appeared by as much as 8%. Another company that was also included on the same list as “military” is CATL, which produces batteries in cooperation with, among others, with Tesla and Ford.
The mentioned classification is the result of the National Defense Authorization Act of 2024, which assumes that The Department of Defense will be prohibited from purchasing goods or services directly from entities on the list in June 2026 and indirectly from June 2027.
According to Tencent, this decision is an “obvious mistake.” The company argues that it is not a military entity or supplier to the defense sector. It also emphasizes that this situation will not affect its business.
What is the real value of Tencent?
According to analyst Ivan Su from Morningstar Tencent’s market valuation is currently clearly undervalued – we read further in CNBC. He estimates that the “fair” value of the company corresponding to its actual potential and foundations is currently 86.14%. more than the current price on the stock exchange.
The analyst believes that inclusion on the “military” CATL list will harm the company on the American market, as local buyers may be reluctant to purchase the company’s energy storage systems and batteries.
With the above-mentioned decision, the United States continues its strategy of limiting the inflow of highly advanced technologies to China.
Tencent – business description
Tencent is a Chinese multinational technology corporation founded in 1998, headquartered in Shenzhen. The company operates across multiple sectors, focusing on video games, social media, cloud technologies and fintech. It is the world’s largest game publisher, with shares in companies such as Riot Games, Epic Games and Activision Blizzard.
Tencent is also the owner of popular communication platforms such as WeChat, which combines communication, payment and e-commerce functions, and QQ, which is an instant messenger. In addition, it develops mobile payment services (WeChat Pay) and cloud technologies, and actively invests in companies from the technology, media, e-commerce and entertainment sectors around the world.
