Tencent to Allow Third-Party Links in WeChat Groups – Report


This article was originally published on TipRanks.com

Tencent (TCEHY) plans to open up its social networking app, WeChat. Bloomberg reports that the company will allow WeChat groups to display external links from other shopping sites such as Alibaba’s (BABA) Tmall and Taobao. TCEHY shares fell 1.08% to close at $58.67 on November 29.

Tencent is a Chinese company that offers value-added and online advertising services. Its value-added service segment is involved in online and mobile games, while the advertising segment represents display-based and performance-based advertisements.

Third-Party Links

The company will soon begin trials on a feature that will allow participants in the WeChat group to share links with third-party e-commerce platforms. The move will make it is easy for WeChat users to share content, in-line with the directive from Chinese regulators. (See Top Smart Score Stocks on TipRanks)

Tencent had initially allowed people to share external links only in one-on-one conversations, upon upgrading to the new version of the WeChat app. The latest function will enable sharing on groups and will also do away with a warning page that often pops up when users click on third-party links.

The company had refrained from dismantling WeChat barriers in fear that the move would have driven users to rival apps such as ByteDance Douyin. The regulators’ warning against blocking rival links appear to have softened the stance.

Opening up WeChat to external links is a major concession for China’s leading social networking and entertainment company, which has come under immense regulatory pressure. The government has, in the recent past, embarked on a crackdown that targeted companies who were perpetuating their dominance in an effort to stifle competition. Specifically, Tencent and Alibaba were two of the companies that were heavily targeted.

Stock Rating

In early November, Barclays analyst Jiong Shao reiterated a Buy rating on Tencent, with an $84 price target implying 43.17% upside potential to current levels.

Consensus among analysts is a Moderate Buy, based on 1 Buy.

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