Tencent logo seen displayed on a smartphone.
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Tencent shares soared to a more than two-year high on Thursday after reporting first-quarter earnings that beat expectations.
The Chinese technology giant’s shares, which are listed in Hong Kong, hit an intra-day high of 447 Hong Kong dollars ($57.67), putting them around 4% higher from Wednesday’s closing price.
That’s the highest level since an intra-day high of $458.96 Hong Kong dollars on March 22, 2018.
Tencent shares pared some of those gains in early trade but were still higher.
On Wednesday after the Hong Kong market close, Tencent said revenue for the March quarter totaled 108 billion Chinese yuan ($15.2 billion) representing a 26% year-on-year rise. Profit attributable to equity holders of the company hit 28.9 billion yuan. Both figures beat analyst forecasts.
The coronavirus epidemic swept across China earlier this year leading to the country effectively being locked down. People stuck at home turned to smartphone games for entertainment which gave Tencent a boost as the country’s largest game maker. Online games revenue grew 31% year-on-year to 37.3 billion yuan in the first quarter, with the bulk of that coming from mobile games.
Meanwhile, Tencent’s advertising business, which was a worry going into the earnings report, held up well.
However, the company flagged some potential headwinds going forward.
In a statement, Tencent said it expects “in-game consumption activities to largely normalise as people return to work” adding that it sees “some headwinds for the online advertising industry.”