Tencent widens lead over Facebook – can it remain world’s largest social networking company?
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Tencent widens lead over Facebook – can it remain world’s largest social networking company?

Facebook and Tencent are both huge companies, with an impressive share price trajectory, and a market cap that dwarfs whole economies. But over the last 12 months, Tencent’s incredible performance on the market has seen it grow larger than Facebook – making it the world’s fifth most valuable company, and biggest player in the social networking space.

Of course, the race is far from over. Silicon Valley’s social giant has seen its share price stutter recently as founder Mark Zuckerberg announced a change of direction that could sacrifice short-term profits for long-term growth. Meanwhile, Tencent has gone from strength to strength, beginning its wildly popular mobile games’ rollout around the world. In six months, things could look different.

graph 0126 tencent

Undoubtedly, both companies are incredibly lucrative – but the tide has been swinging towards Tencent for some time. Over the last 12 months, while Facebook has seen its share price advance by an impressive 41%, Tencent’s has soared by almost 130%! While Facebook has been contending with negative headlines around fake news, political advertising, and grumbling from European regulators, Tencent has seen its popularity increase both at home (where its social networks and mobile games have consistently hit new heights) and with investors (who are warming up to Chinese tech companies).

All this said, only a fool would count Facebook out at this stage. Tencent might be up by $19 billion, but these companies are each worth more than half a trillion dollars. Seen from that perspective, Tencent’s still just a fraction ahead of its western rival. And, of course, in at least some ways, Facebook is the much larger company: Tencent might have over a billion users, but Facebook has more than 2 billion.

Ultimately, both companies have massive user bases of devoted fans, and are evolving into lucrative gaming, media, and advertising companies. Looking at how they’ve performed over the past year, it’s clear who is winning: investors.

Disclosure

Dominion holds both Tencent and Facebook in its Global Trends Ecommerce Fund. 


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