Tencent’s Koolearn play teaches financial savvy

2 minute read

People visit Tencent's booth at the World 5G Exhibition in Beijing, China November 22, 2019. REUTERS/Jason Lee/File Photo

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HONG KONG, June 22 (Reuters Breakingviews) - Tencent (0700.HK) is providing a textbook example of how to bide your time and sell high. Last week the Chinese tech giant pocketed $92 million after selling most of its 9% stake in Koolearn Technology (1797.HK), the online services unit of China’s largest English tutoring company New Oriental (9901.HK). That was right as the stock skyrocketed six-fold in days after the viral success of its livestreaming e-commerce venture during China’s second-largest shopping extravaganza. read more

The WeChat operator held onto its stake even as shares plummeted nearly 70% last year from the 2019 listing after China’s private-tutoring crackdown. Selling now looks smart. Last week’s jump implied Koolearn’s livestreaming studio would be able to sustain 1.3 million daily orders and 80 million daily active users, according to Haitong Securities analysts, a tough act to pull off in a competitive market. There’s also key-man risk in Chinese live-streaming: top stars who may have either committed tax fraud or flouted vague political red lines have disappeared off the screens. Tencent has timed its move just right. (By Yawen Chen)

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Editing by Antony Currie and Thomas Shum

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