Tencent

So Bill Hwang turned $200 million into over 20 billion by doing what every finance textbooks tells you not to do, which is to put all your eggs into one basket and leverage, and he did extremely well with, with Archegos Capital.

So they bet on, uh, Viacom and Discovery and Tencent.

But then-

He turned it into Zero.

Turkey is down a 10th.

Hong Kong also down a 10th, and, uh, Tencent off just over 1%.

Commodities all green.

Gold futures 4,374.

That whole sector is now cheap once again.

Uh, is China priced out of AI? Is there some value there in some of those names like Tencent or Alibaba?

So the interesting thing is when I talked before about multiple compression, I think China fits into that in, in the US times two, uh, [chuckles] times three, whatever you want.

Because if, if we're worried about the US taking over frontier models or taking over companies for the value that they have, then how do you value a Chinese company? And I think people have already run into this because of the sanctions that went on Russia, and from talking to pension funds across the globe after the Russia situation where people lost a lot of money having invested in a country and just seeing what the US can do.

I just love it.

All right, Alvin, we asked you about two stocks that have caught your attention and you mentioned McDonald's and Tencent.

Can we start with Tencent?

Sure.

So Tencent share price have fallen like 30% this year, just this year.

And they used to be the largest company in China by market cap and it's been overtaken by a memory stock called CXMT.

And I don't think that should be the case in terms of revenue, in terms of profitability, in terms of quality of the business.

Tencent is really up there.

And the price? The cache hit input price is 60% lower than before.

Tencent connected it to WorkBuddy and CodeBuddy right away.

What is happening in semiconductors? A shortage of high bandwidth memory has pushed Chinese AI chip prices up 20% to 50% compared with two months ago.

Give me the specific prices.

China has done a very, very good job in creating, you know, one cent donation culture on their WhatsApp-like platforms.

I think outside WeChat and Tencent and some of these companies globally, we saw Facebook launch birthday fundraisers that built community giving culture.

or GoFundMe did obviously very successfully in their journey.

We don't have too many examples of this being a part of our daily lives.

Yeah.

There's a, there's a bunch of lo- Tencent, um, have made a bunch of, um, streaming apps out there.

So how is this one ...

And, and by the way, there's, like, 150 million people paying for streaming on one platform alone in China, right? So the numbers are big.

Oh.

And so it's kind of come in as a free service, and lots of ...

So now the big players in China, so Tencent Music, like you said, they've, it's now started launching its own free music apps to compete.

So it's an interesting thing.

I just love it.

All right, Alvin, we asked you about two stocks that have caught your attention and you mentioned McDonald's and Tencent.

Can we start with Tencent?

Sure.

So Tencent share price have fallen like 30% this year, just this year.

And they used to be the largest company in China by market cap and it's been overtaken by a memory stock called CXMT.

And I don't think that should be the case in terms of revenue, in terms of profitability, in terms of quality of the business.

Tencent is really up there.

Yeah.

Welcome to Tencent Takes, the show where we constantly confuse the playground for the prison yard, one issue at a time.

Jessica's already given me a look.

Yep.

It doesn't really change around here.

But until then, stay safe out there, and we will see you in the stacks.

Thanks for listening to Tencent Takes.

This episode was hosted by Jessica Frazier and Mike Thompson, written by Mike Thompson and edited by Jessica Frazier.