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Today's big stories

Tencent grew its revenue at its slowest since it listed on the stock market
You could make an income from commodities that would put your dividends to shame – Read Now
UK inflation hit another 30-year high last month, catching economists unawares yet again

Playtime’s Over

What’s Going On Here?

Tencent reported worse-than-expected quarterly results on Wednesday, as China’s regulators make it nearly impossible for the tech powerhouse to start a new game.

What Does This Mean?

China’s making life tough for the gaming industry. For one, it’s restricted under-18s to just a few hours of gaming a week, which means less spending on in-game purchases. And for another, studios haven’t been able to get new games off the ground, with regulators having refused to give studios the green light in nearly eight months. That’s taken its toll on Tencent: the League of Legends-owner’s domestic gaming revenue barely grew at all last quarter from the same time the year before.

Tencent’s advertising business has been struggling with crackdowns too, which have pushed companies in a variety of industries to slash their marketing budgets. The company, then, saw its online advertising revenue drop 13% last quarter, meaning its overall revenue rose just 8% – the slowest since it listed on the stock market in 2004.

Why Should I Care?

Zooming in: Two-stop shop.
Those crackdowns have played a part in wiping nearly $500 billion off Tencent’s market value since it peaked last year, and worse could be to come: the Chinese government is reportedly thinking about forcing Tencent to spin off WeChat Pay – part of Tencent’s WeChat messaging platform – into a separate financial company. Thing is, a big part of WeChat’s appeal is the fact it’s a one-stop shop, and breaking it up risks pushing its 1 billion-plus users away.

The bigger picture: Tencent eyes the metaverse.
Tencent’s back is up against the wall in China, so it’s branching out elsewhere: the company’s already partnered up with EA to help turn much-loved franchises into mobile formats, and it’s even launched a whole new international gaming publishing division. And if that doesn’t work, maybe this will: Tencent’s been registering trademarks and hiring developers to prepare for business in the metaverse.

You might also like: How to weigh up Tencent’s stock in two hours flat.

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Analyst Take

Why Commodities Are Suddenly A Much Flashier Investment

Stéphane Renevier, Analyst

What’s Going On Here?

For the past two decades, investing in commodities would’ve cost you a pretty penny.

In fact, you’d pay as much as 20% a year just to hold them, making everything from oil to corn a far bigger commitment than it needed to be.

But that’s because we’ve been in a state known as “contango”. Now, it’s all about “backwardation”.

Because not only does the arrival of backwardation suggest we’re at the start of a rally in commodity prices, it means you’ll actually be paid to hold your oil, corn, and nickel.

So that’s today’s Insight: what backwardation is, why it matters so much, and how you can take advantage.

Read or listen to the Insight here

The Motley Fool’s “All In” Buy Signal

It’s not often you’ll hear a Motley Fool Stock Advisor “all in” buy signal.

But every so often, its team comes across a stock so good they think it’s worth doubling down on. Now happens to be one of those times.

Because there’s a tiny internet company showing this buy signal that sits in the middle of the advertising market – a market that’s 10 times bigger than the online streaming industry.

And its CEO is putting his money where his mouth is: he’s bought over $2.3 billion of stock. That’s his entire fortune, bet on what he’s calling cable TV’s “ticking time bomb”.

Head over to The Motley Fool, and find out which stock they’re so excited about.

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