The latest company to cross the $500 billion valuation threshold is virtually unheard of in the West.
Shares of Shenzhen-based Tencent, a company that made its mark with its popular WeChat messaging service, rose 4.1% in trading Monday on the Hong Kong Stock Exchange to close at HK$420, bringing the company’s valuation to HK$3.99 trillion (about $510 billion).
That places Tencent alongside major US-based technology giants who have passed the $500 billion mark in recent months. Amazon, which went public in 1997, hit a $500 billion valuation in July. Facebook, which went public in May 2012, reached a $500 billion valuation that same month. (Both companies remain over the $500 billion mark.)
Tencent went public in 2004 (paywall), with shares priced at HK$3.70 (then $0.47), raising nearly $200 million. Interest in the stock remained tepid for about five years, before its price began to rise—slowly in 2009, then steadily by 2013, and then meteorically in 2017. Its stock price is up over 120% since its first of day trading this year, according to Factset.
Tencent’s mobile chat app, ubiquitous across the country, originated in 2011 as the Chinese answer to WhatsApp, and now counts some 980 million active monthly users. It has evolved into a news reader, an online payment provider, a taxi hailer, and a search engine all rolled into one. While it makes very little money for Tencent directly, it’s a funnel for the mobile and PC games that have long remained Tencent’s cash cow, and it might eventually turn into something lucrative in its own right.
The company has delivered stellar earnings over the past year, driven largely by the success of the hit mobile game Honour of Kings. Last week it reported quarterly revenues of 65.2 billion yuan ($9.8 billion), up 61% from the year prior, and net income of 18 billion yuan (about $2.7 billion), up 69% from the year prior.