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BABA Jan 2022 205.000 call

OPR - OPR Delayed price. Currency in USD
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70.900.00 (0.00%)
As of 11:37AM EDT. Market open.
Full screen
Previous close70.90
Expiry date2022-01-21
Day's range68.10 - 71.00
Contract rangeN/A
Open interestN/A
  • Tencent Plays Down WeChat Ban After Results Beat Estimates

    Tencent Plays Down WeChat Ban After Results Beat Estimates

    (Bloomberg) -- Tencent Holdings Ltd. tried to reassure investors that U.S. President Donald Trump’s ban on its WeChat messaging service may apply only to its overseas operations, suggesting the impact on the world’s largest gaming corporation should be modest.The Chinese company’s shares gained as much as 2% in Hong Kong. During a conference call after earnings, executives repeatedly emphasized the distinction between WeChat, which is used outside China, and Weixin, a similar service within the country. Trump’s executive order specifically mentioned banning the former because of alleged risks to American national security.“The executive order is focused on WeChat in the United States and not other businesses in the U.S.,” said Chief Financial Officer John Lo. “We are in the process of seeking further clarification from bipartisan parties in the U.S.”Trump ignited a furor after signing the order to ban U.S. entities from dealing with WeChat -- along with TikTok, ByteDance Ltd.’s viral video platform -- from September. Confusion reigned as investors grappled with the sweeping language of Trump’s order -- which bars “transactions” with the Chinese company -- that leaves the door open for the administration to extend it well beyond the service in America.Tencent’s Retro Roots Juice Its Pandemic Profits: Tim CulpanDespite stating at the outset it wouldn’t get into hypotheticals, Tencent fielded question after question revolving round the ban, which wiped $66 billion off the company’s market value after it was announced last week. Executives said several times they were still figuring out how the order would be applied.Their comments came after Tencent boosted revenue at the fastest pace in two years and reported profit that beat the highest analyst estimate. Sales rose 29% to 114.9 billion yuan ($16.5 billion) in the three months ended June, while net income increased to 33.1 billion yuan.The expectation has been that Trump’s order would result in WeChat getting pulled from Apple and Google’s app stores, where the vast majority of smartphone owners get their applications. That would mean suspending updates or even blacking out a service vital to communications on the factory floor, in households and the boardroom. Apple Inc. would be at particular risk if it couldn’t offer the software on iPhones in China.Read more: Apple’s $44 Billion China Market Threatened by Trump WeChat BanWhat Bloomberg Intelligence SaysHeightened usage of Tencent’s digital services driven by Covid-19 may boost the company’s earnings in the coming quarters. The online game business could continue to expand through the year with popular new titles in the pipeline and enhanced monetization features. Media advertising sales might remain subdued due to weak demand and delayed video content, but social-advertising growth could stay robust.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Tencent executives also fielded questions about whether American companies would be able to keep doing business with the Chinese tech giant. U.S. companies like Starbucks Corp. and Walmart Inc. collaborate with Tencent in China and generate advertising and e-commerce revenue for the company. The U.S. represents less than 2% of Tencent’s global revenue, executives said.“When we saw the executive order a couple days ago, they specify quite clearly they cover the U.S. jurisdiction, and consequently, we don’t see any impact on companies’ advertising on our platform in China,” said James Mitchell, chief strategy officer.China’s biggest social media company has benefited from an internet resurgence during the coronavirus pandemic. It won approval from Beijing to earn money from Call of Duty Mobile, the smartphone version of a long-running franchise that will underpin its gaming business, and has charted a line-up of new titles for 2020 to shore up resilient franchises Peacekeeper Elite and Honor of Kings.New titles like Brawl Stars drove a 40% surge in online gaming revenue during the quarter -- its biggest increase since 2017. It’s also driving discussions to merge U.S.-listed Huya Inc. and DouYu International Holdings Ltd. to create a Twitch-like $10 billion local leader in games streaming. Tencent has already folded Huya’s results into its own, swelling both its top and bottom line.One risk to its outlook was the surprise delay of Mobile Dungeon&Fighter, though analysts expect eventual approval for a Nexon Co. title that’s supposed to be Tencent’s tent-pole for the second half.”Although the direct revenue impact is small, Mobile DnF’s delay and the WeChat ban in the U.S. cast a shadow over the near term outlook,” Bernstein analyst David Dai said.Read more: Trump’s WeChat Assault Endangers $280 Billion Tencent RallyRead more: Trump’s Assault on WeChat Endangers a $280 Billion Tencent RallyThe WeChat and Weixin services grew monthly active users 6.5% to more than 1.2 billion as of June’s end. Started in 2011 as a WhatsApp clone, the app has become deeply ingrained in Chinese life, indispensable to the hordes who use it to chat, shop, watch videos, play games, flirt, order food and taxis. It pioneered the all-in-one or super-app concept by embedding lite apps or mini programs -- a model emulated by Alibaba Group Holding Ltd. as well as Facebook Inc. Its success sprang in part from the fact that China banned global services such as WhatsApp, Twitter and Instagram, allowing WeChat and a host of other Chinese equivalents to flourish in an alternate internet realm.“Uncertainties still exist for Tencent and other Chinese internet companies with business in the U.S., and Chinese pure-plays will be perceived as safer by investors,” Dai wrote before earnings were released.Read more: Why Tencent and WeChat Are Such a Big Deal in China: QuickTake(Updates with share action from the second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Here's Why Investors Should Hold on to Starbucks (SBUX) Stock

    Here's Why Investors Should Hold on to Starbucks (SBUX) Stock

    Starbucks (SBUX) solid global footprint, successful innovations and digital offerings bode well. However, soft comparable store sales, margin decline and high debt remain a concern.

  • Tencent's Retro Roots Juice Its Pandemic Profits

    Tencent's Retro Roots Juice Its Pandemic Profits

    (Bloomberg Opinion) -- For all the fame and attention Tencent Holdings Ltd. receives because of its ubiquitous WeChat messaging app — which has 1.2 billion users and counting — the Chinese internet giant’s old-school roots as a games company are what pulled it through the darkest days of the pandemic.A 40% increase in online games revenue, including a 62% jump in the smartphone subcategory, helped quarterly sales beat estimates by the most in four years, according to results reported by Tencent on Wednesday. Advertising, on the other hand, was lackluster. Media advertising — placed on its content platforms —  remained particularly weak, posting a fifth straight decline.With China pulling out of the Covid-19 outbreak earlier than most countries, the hope was that consumer spending had returned to normal and the economy was close to stabilizing. That thesis may need to be rethought.What Tencent’s June-quarter numbers tell us is that even China remains in a kind of economic limbo. Nesting habits — such as gaming and video-streaming — remained hot, while consumer-goods expenditure looks anemic. At the very least, advertisers themselves lacked the confidence to boost marketing budgets to lure whatever consumption may be available.There’s also the elephant in the room: the U.S. administration’s plan to ban American companies from working with Tencent and WeChat. Such a move could at the least interrupt how the Chinese company distributes its app and sell ads, but the impact on revenue is likely to be limited given its solid domestic focus.Thankfully for Tencent, games are here to act as a savior. Advertising has never been a major revenue driver, peaking at 20% of sales in the third quarter of 2018. Still, it has provided icing on top of Tencent’s games, fintech, and media businesses. The division is profitable, with gross margins hovering around 50%. Games are solid, though, accounting for a third of revenue in the quarter. Tencent’s social networks business — which includes live broadcast service Huya — also did well, posting a 29% rise that was the most in two years. Its fintech and business services unit — mostly cloud and financial products— climbed a solid 30%.It’s a bonus that games and social combined — under the label value-added services — have the fattest margins of all Tencent’s businesses, at 53.7%.This should serve as a warning to other Chinese internet companies, especially those that rely inordinately on advertising. Alibaba Group Holding Ltd. has remained an investor favorite throughout the turmoil in the belief that its size gives it an advantage. That company was hit particularly hard in the first quarter, eking out growth in enterprise businesses such as cloud computing. It’s likely that second-quarter figures will look better when it reports earnings Aug. 20, but investors will need to dig into the data to see the true source of growth.Tencent, however, already knows where it strength lies, and that’s in the old-school games business. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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