Admittedly, the way we phrased the title of this article is telling. Tencent Holdings is a super star for 13 years in a row when it comes to its stock price. After so many years of continuous rises this stock looks tired, at least for the short into the medium term, not necessarily the long term. Let’s find out in this article whether Tencent Holdings, symbol SEHK 700 in Hong Kong, is still a buy. More generically, the conclusions from our analysis may apply to any stock, regardless of whether it trades, which is the reason why we dedicate an article on this Hong Kong stock.
Founded in November, 1998, Tencent is a leading provider of Internet value added services in China. Since its establishment, Tencent has maintained steady growth under its user-oriented operating strategies. On June 16, 2004, Tencent Holdings Limited (SEHK 700) went public on the main board of the Hong Kong Stock Exchange.
Tencent has been extremely successful in enhancing the quality of human life through Internet services especially in Hong Kong and China. Presently, Tencent provides social platforms and digital content services under the “Connection” Strategy. Tencent’s leading Internet platforms in China – QQ (QQ Instant Messenger), Weixin/WeChat, QQ.com, QQ Games, Qzone, and Tenpay – have brought together China’s largest Internet community, to meet the various needs of Internet users including communication, information, entertainment, financial services and others. Due to the enormous market share, it is a formidable force that Facebook could not ignore if the latter finally can get access to China.
Tencent Holdings: stock to buy in 2018? At which price?
The monthly chart of the stock price of Tencent Holdings can be described in a nice trending uptrend channel since the inception of trading. A staggering > 60000% gain for those who bought it in 2004. The upper channel resistance appears very solid to prevent any attempt to break out.
In the short term, prices could move higher, but the risk of buying now is too high for a small gain compare to the downside risk. InvestingHaven’s team remain very bullish with this technology stock but there is always a time when price seems technically saturated and a retracement is imminent.
We observe on the daily line chart of Tencent a potential double top formation: if the red horizontal level successfully rejects, 355-365 will be the first level of support, followed by 330-335 and 267-284 should each one fail to support ultimately. There is also another possibility of the price moving into a consolidating triangle which is shown with the dotted line.
This is volatile period of time for Tencent Holdings, and it may be eyeing lower prices which would ultimately offer a great buy opportunity.
The bigger learning from the analysis in this article is that you should be very careful buying a stock at its all-time highs. While prices may continue to go higher, there are times of retracement. A great stock should be bought on the dip.
You are advised to consult with your financial advisor to evaluate the company’s performance before trading/investing in this stock.