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Tencent outpaces Facebook in race for $1 trillion valuation

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While most tech stocks around the world entered the second quarter of the year doing their best HALO jump impression, Chinese giant Tencent did a remarkable job of navigating recent difficulties, as evidenced by the fact it’s once again ahead of Facebook in terms of market capitalization. Tencent’s combo of superior domestic entrenchment and foreign M&A activity hence allowed it to stage a much swifter rebound from the coronavirus crisis than Facebook.

Which is really saying something given how Facebook’s recovery has been pretty impressive, as well. But three months later, Tencent is hitting new heights on a daily basis, having added more than $200 billion to its public valuation following the initial ordeal.

A chart comparing Tencent and Facebook's market caps over a five-year period ending July 2020.

Facebook and Tencent have been nurturing a fierce rivalry for years now.

However, what makes this latest shift in power dynamics particularly interesting is that Tencent may truly be able to sustain it, for once. Most of its previous such achievements were rather short-lived but not only is its digital empire – valued at over $665 billion – presently more versatile than ever, but Facebook actually has far bigger problems to worry about at the moment; most notably regulatory pressure from antitrust authorities in its home country.

None of this is to say Tencent is imune to domestic competition probes but it seems to have a penchant for timing its clashes with regulators. For example, the last serious antitrust probe it faced in China was abandoned amid the chaos stemming from the novel coronavirus outbreak in the country back in february.

Two decades later, Tencent still defying all expectations

China may be a huge market, but Tencent’s ability to keep pace with and surpass Facebook largely comes down to its superior international bets. Between massive investments in Fortnite developer Epic and outright acquisitions of (former) gaming darlings Riot and Supercell, Tencent’s portfolio is currently evolving into an established entertainment brand. In that respect, it’s been much more successful at translating massive social media capital (from WeChat) into largely unrelated projects. After all, when was the last time you checked out a new game because it was published by or otherwise associated with Facebook? Not to mention the company’s consistently underwhelming effort to rival YouTube.

With Washington now scrutinizing it over antitrust concerns, Facebook will will truly have to up its game in the near future as Tencent’s overseas ambitions aren’t just outpacing the performance of the world’s largest social media platform but are also still successfully circumventing major regulatory issues abroad. So, as things stand right now, Tencent seems to be a clear favorite over Facebook for the fifth-place finish in the world’s first public race toward a $1 trillion valuation.

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