"At the beginning of 2017, holding Tencent $TENCENT (00700.HK)$It's been almost 5 years, and it's still negative returns. Is it because of misjudgment? The profit has indeed increased; to say the holding period is short, it's almost 5 years, how much longer does it need to be?
A value investor complained on Xueqiu. A sigh, and the responses kept coming. Domestic value investors also expressed confusion and resentment.
In a way, their complaints are somewhat reasonable.
After all, in these five years, Tencent's profit has tripled; the competitiveness of each business line remains at the top 3 level; the social moat is so wide that even with a telescope, the opponent cannot be seen.
But the market feedback is indeed flat.
It is said that a good company is worth holding for the long term, but not making money after holding Tencent for 5 years makes it difficult for many people to accept.
Simply put, it must be due to overvaluation.
However, such a superficial explanation is not enough to be convincing. Based on this, a deep restoration of the inside and outside situations at these two time points has been done, and some analysis has been carried out, with the following three insights:
1. Under the drive of product cycles, we need to beware of the sustainability of the cycle.
2. Business transformation caused by technological iteration requires anticipating the competition trends.
3. For business with high sensitivity to macro and regulatory factors, regular examinations of the coordinate system are needed.
First, be alert to the sustainability of the high prosperity driven by the product cycle.
In late June, Tencent began its third round of layoffs this year, with a focus on optimizing the Interactive Entertainment Group (IEG) department. According to the disclosure of relevant employees: in better departments, the layoff rate is about 20% to 30%...