Chinese video game and social media company Tencent (TCEHY) saw its stock dive today after the U.S. Department of Defense (DoD) added it to its list of Chinese military companies. The DoD added Tencent to this list as it claims the company works alongside China’s military. It joins 134 other companies on the list.
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Being added to this list is bad news for Tencent as it could harm its reputation. That could cause some companies to choose to avoid business with it. Further action from the DoD could result in bans or restrictions on its operations in the U.S., creating more trouble for investors.
Tencent is a major investor in video game development and publishing companies. It fully owns League of Legends developer Riot Games, has an 11% stake in Assassin’s Creed developer Ubisoft (UBSFY), a 40% stake in Fortnite maker Epic Games, a 30% stake in Baldur’s Gate 3 developer Larian Studios, an 80% stake in Path of Exile creator Grinding Gear Games, a 16% stake in Elden Ring maker FromSoft, and has several other game-related investments. It’s unclear how the DoD listing will affect its work in the video game industry.
How This Affects TCEHY Stock
Investors aren’t happy about Tencent being added to the DoD’s list of Chinese military companies with the stock down 7.81% as of this writing. Investors will note the stock gained 33.86% over the last year. If today’s negative movement continues, or the DoD announces new restrictions, it could spell further trouble for shareholders.
Is TCEHY Stock a Buy, Sell, or Hold?
Turning to Wall Street, only one analyst has covered Tencent in the last three months. Four-star Barclays analyst Jiong Shao has a Buy rating and a $66 price target for the shares. This represents a potential 34.64% upside for TCEHY stock.
