Irrespective of the recent crackdown actions that the Chinese multinational conglomerate – Tencent has faced, the social media and gaming giant published an impressive result for its second-quarter profit. The company published a 29 percent increase in its profit from the previous quarter. Although the company has been faced with regulatory crackdowns in recent months, it was still able to record an impressive quarter, even with the boom that came with the coronavirus pandemic beginning to slow down.
For revenue, the company posted a 20 percent increase to 13.8 billion yuan. This was in line with the expectations of analysts. Net profit for the quarter ended June stood at 42.6 billion yuan. This beat the average estimate of 34.4 billion that Refinitiv had estimated from the average of the expectations of thirteen analysts. Sales from mobile games went up by 13 percent.
Tencent’s results are pretty impressive. Investors were afraid that the recent regulatory actions against the company would gravely affect the company’s quarterly results, and somehow Tencent was able to allay this fear. Tencent, among other companies in China, has been at the epicenter of regulatory actions aimed at boosting data privacy and creating a consumer-centered system for these companies to run on.
In June, the tech giant got sued over ‘inappropriate content’ in its Honor of Kings game. The lawsuit was filed by Beijing Teenagers Law Aid and Research Center. According to this lawsuit, the game contained content that they deemed unsuitable for children. This was just the beginning of its woes. The State Administration of Market Regulation (SAMR), in July, blocked Tencent’s plan to merge video games platform Douyin and Huya on grounds that when combined, Huya and Doyin would consolidate Tencent’s market dominance as the companies already had more than 70 percent of the market share when combined.
Tencent was also ordered to give up music licensing rights by the State Administration of Market Regulation (SAMR). The move was a punitive restriction to put the social and economic power of China’s tech giants, such as Tencent, in check. Irrespective of this, Tencent Music beat the expectations of analysts for the second quarter. It reported an impressive quarter stating that more people subscribed to its music streaming platform. On Monday, Tencent Music, the music entertainment wing of Tencent, stated that its online subscriptions were unlikely to be seriously affected by China’s copyright rules. Its music shares rose 3.1 percent in extended trading after its earnings release on Monday.
Tencent seems to be affected slightly by the regulatory actions that have challenged it in the past few months. The company has also stated that it is keen on compliance and would continue ensuring that its services are tailored for the satisfaction of its consumers.