Robust earnings from Tencent Holdings sent its market value surging by as much as $34-billion on Thursday, helping the Chinese technology giant briefly reclaim the mantle of Asia's most valuable listed company.
Tencent's WeChat messenger app now has 1.04 billion users.
On Wednesday, Tencent reported its earnings for the first quarter that beat Wall Street expectations boosted by its hugely successful gaming business. But the cost of revenue in that category doubled to 11.91 billion yuan, due to subsidies and promotional expenses.
Revenue rose 48 per cent to 73.53bn yuan, beating the 70.93bn yuan average estimate of 14 analysts, according to Thomson Reuters data. The company secured the rights to distribute both "battle royale" games in China and beyond and said it is just beginning to monetize them.
Smartphone games revenue, the largest revenue contributor, was 21.7 billion yuan in the quarter.
The company, however, warned that delays in earning revenues from those games in China and heavy marketing expenses are expected to hit mobile games revenue in the short term. But Japan's Nikkei rebounded 0.7% on the back of a still-soft yen, and New Zealand's benchmark rebounded 0.6% following Wednesday's slump.
Social networks revenues, including from Tencent's video and music business, increased by 47 percent to 18 billion yuan. In a statement accompanying the earnings report, Tencent Chairman and CEO Ma Huateng said, "In the first quarter of 2018, we launched the popular tactical tournament mobile games and enhanced the capabilities of widely-used services such as our Weixin Mini Programs, deepening engagement across our social, games and media platforms". The company is once again worth more than half a trillion dollars.
The results helped offset worries about pressure on Tencent's margins as it spends heavily in areas such as gaming, entertainment, retail and e-commerce for growth amid stiff competition from Alibaba Group Holding and others.
Despite criticism that Tencent has lost its innovation ability and has become more like an investor, the company has proved that its investing activities actually go hand in hand with the development of its core business.