Wall Street Did Not See This 32% Downside Coming

Bright side: More upside!
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OK, it's still worth a little more than this, but... By Tencent (Tencent) [Public domain], via Wikimedia Commons

OK, it's still worth a little more than this, but... By Tencent (Tencent) [Public domain], via Wikimedia Commons

Chinese videogame-maker Tencent is worth $175 billion less today than it was at the beginning of the year. To say that this has come as a surprise to just about everyone covering the company fails to convey the state of shock in which the Street finds itself re: Tencent, which is to say that it (well, one person on it, anyway) is practically apologetic. On the other hand, while those “buy” ratings may have been a bit premature, that means they’re that much more right now.

Nearly all the equity research analysts that cover Tencent have buy-related recommendations on the stock, which recently traded 32% below its average price target, according to FactSet.

“We have been entirely blindsided by these most recent results, for which we apologize,” Douglas Morton, head of research for Asia at brokerage Northern Trust Capital Markets, said in a note after the company fell far short of his profit estimates….

Mr. Morton of Northern Trust, who has on multiple occasions this year advised clients to buy Tencent shares when they were tumbling, said he thinks the long-term outlook for the stock is still positive. “We remain buyers (albeit with humility),” he said.

Tencent’s Rout This Year Has Wiped Out Over $175 Billion in Market Value [WSJ]

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