Shares in the Chinese social media and gaming giant sank more than 3% in Hong Kong on Thursday morning, hours after its US-listed shares closed 5.4% lower on Wall Street.
The stock plunge came after Tencent (TCEHY) reported revenue of 144.2 billion yuan ($22.6 billion) for the fourth quarter of 2021, up 8% from a year earlier. That’s the slowest revenue growth since the company listed on the Hong Kong Stock Exchange in 2004.
Tencent’s annual revenue for 2021 was up 16% compared to the previous year, slowing from the 28% growth it recorded in 2020.
Co-founder Pony Ma and president Martin Lau joined an earnings call on late Wednesday and acknowledged that 2021 was a “challenging year” for Tencent and China’s internet industry more broadly. Since November 2020, Chinese authorities have launched a sweeping crackdown in an effort to rein in big players in industries ranging from tech and finance to gaming, entertainment and private education.
The internet industry has faced “fundamental changes and challenges,” Lau said during the call, adding that “new regulations have been introduced” to correct industry misbehavior and promote fair competition, user protection and data security.
These “structural industry challenges” have affected Tencent’s financial performance, leading to slower revenue growth as the company adjusted to the new environment, Lau said.
Both Ma and Lau endorsed Beijing’s crackdown on the tech industry, reiterating regulators’ words that the government restrictions will help end the industry’s “reckless expansion” and “frothy growth.”
“We are proactively embracing changes to better align ourselves with a new industry paradigm,” Lau said, adding that the company will focus more on user value, tech innovation, and social responsibility.