Tencent's warning on China regulations overshadows strong Q2 2021 earnings release

Tencent's Q2 2021 earnings featured major wins, but government regulations threaten to curb its success in further quarters.

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Throughout the world right now, Tencent has proven to be a juggernaut of gaming. The Chinese gaming company has investment both at home and abroad in competitive, mobile, and various online gaming markets that have allowed it to become an incredible force in the industry. The company just posted its Q2 2021 earnings. However, Tencent is also still at the mercy of decisions by its own government and the effects of that are threatening to show through the rest of the fiscal year as China cracks down hard on gaming and online industries within its borders.

Tencent shared its Q2 2021 earnings report on its investor relations website on August 19, 2021. It was a strong quarter for the company with boasts of a 20 percent climb in revenue and an over 29 percent increase in profit over Q1 totaling 42.6 billion yuan (about $6.56 billion USD) to beat expectations. For a company as large as Tencent, this should be considered very big news, but Tencent was also involved in various Chinese regulatory crackdowns over the course of recent months.

Tencent stock started 2021 strong and even saw increases of value, but continuous Chinese regulation and further factors have caused the stock value to slip little by little throughout 2021.
Tencent stock started 2021 strong and even saw increases of value, but continuous Chinese regulation and further factors have caused the stock value to slip little by little throughout 2021.

Tencent had a merger fall through due to regulation that would have seen two of the country’s largest streaming platforms come together. The company also saw its stock slip when, during ongoing regulatory crackdowns, Chinese media referred to online gaming as “spiritual opium,” teasing that further regulation may be coming.

Despite this, Tencent has expressed confidence that it can comply with ongoing shifts in mood and regulation to continue business, according to CNBC. At the same time, the company also cautions that these ongoing regulatory efforts may affect the company’s business and operation as it works to remain inside the lines of regulation that have seen companies like rideshare app Didi Chuxing take major hits over cybersecurity crackdowns.

While Tencent’s Q2 2021 remained impressive and the company will continue to be an undeniable force in the global gaming industry, it will remain to be seen what effects ongoing Chinese government moods and regulatory measures on gaming have on Tencent going forward. For more reporting on the recent fiscal quarter, stay tuned here at Shacknews as further companies continue to report.

News Editor

TJ Denzer is a player with a passion for games that has dominated a lifetime. When he's not handing out beatdowns in the latest fighting games, exploring video game history, or playing through RPGs with his partner, he's searching for new food and drinks in the constant pursuit of good times with good people inside and outside the South Texas area. You can also find him on Twitter @JohnnyChugs.

From The Chatty
    • reply
      August 19, 2021 1:57 PM

      Is it actually that the government is honestly concern with its citizen's health? Is it that they fear gaming detracts from their sociological ideology? Or, is that there's a fear that gaming brings too much western ideas and practices that threatens their way of life (may be the same as the 2nd point actually)?

      Or, they'd rather people spend that game time being productive for the state?

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        August 19, 2021 2:00 PM

        ...yes

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        August 19, 2021 2:50 PM

        Its a combination of both fear of western values influencing children, and the negative impacts of video games on child development that would go against the ideas of a strong capable workforce (things like eyesight and problems that can arise from addictive behavior).

        • reply
          August 19, 2021 2:57 PM

          What if the game focused on impoverishing western capitalistic dogs?

          • reply
            August 19, 2021 4:08 PM

            So it's a Gold Farming game?

            • reply
              August 19, 2021 4:12 PM

              "You go now! PK PK"

              That's all I remember of Lineage 2

              • reply
                August 20, 2021 7:29 AM

                miss that game. loved the PK. unf

                • reply
                  August 20, 2021 7:31 AM

                  If it wasn't for the gold farmers pushing people out, I admit I had fun with the game. Good graphics for the era and active combat. But, geeeeez, the gold farmers ran the game.

      • reply
        August 19, 2021 5:11 PM

        All of the above

      • reply
        August 20, 2021 7:35 AM

        Yes. Shocker I know

    • reply
      August 20, 2021 5:16 AM

      Cracking down on the education sector here HARD right now. Training centers are basically going bust unless they conform to new educational standards.

      The rational is that students are overworked and stressed, so to alleviate pressure they’re taking away opportunities for extra-curricular and curriculum-adjacent learning.

      My company is going through big changes in their curriculum/marketing approach and the staff are who take the hit (because revenue streams are drying up and parents are jumping ship).

      I’m taking a 15% pay cut until January when it will withheld salary will apparently be paid out in a lump sum.

      Can’t wait to get out of here.

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