Pentagon List Includes Tencent, Causing Stock Dip; Company Responds
Tencent, a major Chinese technology firm, has been added to the U.S. Department of Defense's list of companies with ties to the Chinese military (PLA). This designation stems from a 2020 executive order by President Trump restricting U.S. investment in Chinese military entities. The order prompted immediate delistings of several companies from the New York Stock Exchange. The DOD's updated list, released January 7th, now includes Tencent.
Tencent's inclusion on the list resulted in a significant 6% drop in its stock value on January 6th, with continued downward pressure observed since. Experts link this decline directly to the DOD's action. This is noteworthy given Tencent's global prominence as the world's largest video game company by investment and a major player in the broader technology sector.
Tencent issued a statement to Bloomberg, asserting that it is neither a military company nor supplier. While claiming the listing doesn't impact its operations, the company indicated it will collaborate with the Department of Defense to resolve any misunderstandings.
This situation echoes previous cases where companies successfully petitioned for removal from the list after demonstrating they no longer met the criteria. Tencent is expected to pursue a similar course of action. The potential loss of U.S. investment opportunities represents a substantial financial risk for Tencent, whose market capitalization dwarfs that of its nearest competitor, Sony, by a factor of four.
Tencent's gaming empire, Tencent Games, operates through a publishing division and boasts significant ownership stakes in prominent studios such as Epic Games, Riot Games, Techland (Dying Light), Don't Nod (Life is Strange), Remedy Entertainment, and FromSoftware. Furthermore, Tencent Games has invested in numerous other notable developers and related businesses, including Discord.
