Just 18 months ago, Tencent was poised to become Asia’s second-largest trillion-dollar company, as the Chinese internet giant led the fight for dominance against its American rivals.

But a market value wipeout of more than $560 billion later, and with stocks falling to a nearly four-year low, investors hoping for a smooth recovery are running out of steam.

Next week, Tencent will seek to reassure investors of its outlook during the second quarter results. They won’t be easy to convince.

The company is expected to record its first quarterly revenue decline since the 2008 financial crisis, weighed down by a slowdown in game sales.

“We need a recovery in profits. But we don’t see it yet,” said Paul Pong, managing director of Hong Kong-based Pegasus Fund Managers. “The biggest problem for Tencent, like many of its peers, is that growth has almost stalled.”

Since Tencent’s stock hit an intraday high in February 2021, it has fallen nearly 60% and lost more value than any other stock in the world, according to data from Bloomberg. Alibaba Group, whose shares have fallen 65% during this period, ranks second in terms of the largest losses with $495 billion.

News that a series of Chinese companies are pulling out of US exchanges is also weighing on sentiment – tech stocks on the mainland slid in premarket trading in New York on Friday.

In late June, e-commerce company Prosus – whose parent company was an early investor in Tencent more than two decades ago – became the latest high-profile backer to cut its stake. Shares fell despite Tencent buying back HK$3.6 billion ($459 million) of its own shares since then.

Part of the problem is that Tencent has yet to receive regulatory approval for new video game licenses, even though its peers are getting the green light. Player spending for its very popular honor of kings Mobile gaming has declined for three consecutive months since May, according to data from SensorTower.

Covid-related lockdowns are hurting profits and media reports of layoffs are raising concerns.

“The market expects no new game approvals for Tencent this year, a double-digit decline in ad revenue and struggling cloud businesses,” said Julia Pan, Shanghai-based analyst at UOB Kay Hian.

Ms Pan, who said Prosus sales will cap Tencent’s valuation, expects the company to cut more jobs in non-core areas to boost its margins.

Whether that’s enough for a turnaround is another question. Even as authorities pledge to support the tech sector, economic concerns loom, including fears of a global recession and China’s strict adherence to “zero Covid” which is dampening ad revenue.

Updated: August 13, 2022, 5:00 a.m.

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