tech

Tencent plunges $45 billion after Trump’s WeChat ban

Tencent Holdings, China’s largest gaming and social media company, shed more than $45 billion of market value after sliding by the most since October 2011 on an intraday basis.

Tencent ranked as the world’s biggest games publisher by revenue in 2019, according to Newzoo data, and it collaborates with US industry leaders like Activision Blizzard and Electronics Arts.
Tencent ranked as the world’s biggest games publisher by revenue in 2019, according to Newzoo data, and it collaborates with US industry leaders like Activision Blizzard and Electronics Arts. (REUTERS)

Tencent Holdings dived more than 10% after US President Donald Trump ordered a ban on WeChat and “transactions” with the company that threatened to stifle its global business.

China’s largest gaming and social media company shed more than $45 billion of market value after sliding by the most since October 2011 on an intraday basis. The vaguely worded executive order could potentially hammer not just the use of WeChat and WeChat Pay in the US but extend to business relationships with some of America’s largest corporations.

Tencent ranked as the world’s biggest games publisher by revenue in 2019, according to Newzoo data, and it collaborates with US industry leaders like Activision Blizzard and Electronics Arts. It also holds a large stake in Fortnite maker Epic Games and owns League of Legends developer Riot Games. Though some confusion remains about the extent of the ban, at its most extreme it would prevent any US entities from transacting with Tencent, effectively freezing billions of dollars of commerce.

Trump’s order on WeChat came after a similar injunction against ByteDance’s TikTok, the viral video service the White House accuses of jeopardizing national security. But Tencent is at the heart of communications between people and businesses within China and abroad, as the operator of WeChat.

“A ban on WeChat would be consequential because it would practically shut down communication between the US and China,” said Graham Webster, China Digital Economy Fellow at think tank New America. “There are real data, privacy, and security concerns but they go well beyond these two Chinese apps and these orders just wrap the real issues up in political theatre.”