Goldman Sachs sees recovery in Tencent’s games revenue but ad growth to remain sluggish

In the first quarter Tencent reported a 2% year on year decline in mobile games revenue to US$3bil.

Chinese tech giant Tencent Holdings should see its games growth recover in the second quarter thanks to multiple new titles being released since the resumption of license approvals, but advertising revenue growth will be sluggish due to intense competition, according to a report from Goldman Sachs.

The investment bank maintains a “Buy” rating on the stock and expects mobile gaming revenue growth to recover to 23% year on year in the second quarter. In the first quarter, Tencent reported a 2% year on year decline in mobile games revenue to 21.2bil yuan (RM12.68bil) due to fewer new titles being released in the period.