Alibaba Group Holding Ltd. (NYSE:BABA) used to dominate the technology scene in China, but that is no longer the case since Thursday, when Tencent drove up from the rear to take over technology markets in China. The title of “China’s most valuable technology company” now goes to Tencent, and it appears to be a titled well-deserved in the light of recent developments.
With its stocks publicly traded in the New York Stock Exchange in the US, Alibaba is the largest e-commerce company in China with a market capitalization of $242.04 billion. Tencent on the other hand is traded in Hong Kong but now has a market capitalization of $246.35 billion after Thursday’s market transactions – the CNBC reports.
Tencent dominates online and mobile gaming arena
Tencent owns WeChat, a social messaging app, and Weixin. Both messaging apps now have a monthly user base of 806 million, an increment of 34% when compared with active users last year. Tencent is fast becoming China’s market leader in mobile gaming and advertising, two main sources of its Q2 revenues.
Analysts had earlier predicted a second quarter revenue of 33.2 billion yuan for the fast-rising tech company, but it exceeded this forecast by 52% to clinch a Q2 earning of 35.69 billion yuan. It also now has 14.33 billion yuan for operating profit, an increment of 43% when compared with the same period for last year, TheStreet writes.
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Tencent grew its Q2 earnings to reach almost 9.6 billion yuan – largely from smartphone and online games. Part of its top performing gaming titles are JX Mobile and Honor of King among others. Meanwhile, the company in June bought a majority stake in Supercell, creator of Clash of Clans and Clash Royale among others. Supercell is a Finish gaming company.
Can Baidu upturn Tencent and Alibaba’s dominance in the tech space?
Given the fact that Tencent and Alibaba (NYSE:BABA) are at the top echelon of technology markets in China, analysts fear other strong competitors such as Baidu may upturn the duo’s dominance in the region. But a senior equity analyst with Morningstar, Marie Sun, disagrees. Sun maintained that Baidu does not have the kind of business model and monetization leverages that Tencent and Alibaba have, and both are tech strategists at what they do.
Both Alibaba and Tencent use their platforms to provide internet content and other related services to users, while Baidu focuses more on online advertising and internet search to generate earnings. To drive home this point, users are now able to use WeChat as a news feed, access articles, music, images, and text, while also using the platform to send and receive money, pay utility bills, and to book essential services.
Alibaba is not fazed by Tencent’s performance
Alibaba (NYSE:BABA) is not losing sleep over Tencent’s recent performance, and its spokesperson made that perfectly clear via email. The company maintained its market domination has little to do with stock performance, and Tencent’s stock performance does not necessarily indicate superior market strength in the arena where they both compete.