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Tencent traders prepare for wildest earnings reaction since 2015

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Traders aren't taking any chances, paying up for bearish contracts that protect against losses in the stock.

Hong Kong

THURSDAY is set to be a big day for Tencent Holdings Ltd investors, one way or the other.

The options market is implying a share price move of 5.1 per cent in either direction after Wednesday's earnings report, according to data compiled by Bloomberg. That would be its biggest post-results reaction since August 2015, when the stock rallied 6.8 per cent. Traders aren't taking any chances, paying up for bearish contracts that protect against losses in the stock.

Tencent has lost more than US$150 billion in market value since a January peak on expectations that revenue growth will slow amid a lack of new gaming releases. The declines accelerated this week after the one of the Internet giant's newest titles faced a regulatory setback in China, sending the stock down almost 10 per cent in the past four days.

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Market voices on:

Almost every single analyst tracked by Bloomberg still likes Tencent, sticking to their buy ratings throughout the rout even as they slashed price targets and financial estimates. BLOOMBERG