Regulatory And Geopolitical Risks Will Constrain Future Prospects

Key Takeaways

• Heavy dependence on Tencent amid regulatory and geopolitical risks exposes Naspers to unpredictable earnings and limits efforts to diversify revenue.
  
• Complex structure and growing competition reduce investor confidence, undermine value creation, and threaten future profitability across core businesses.
  
• Strategic focus on operational efficiency, AI innovation, M&A, and ecosystem synergy is driving margin expansion, revenue growth, and reduced reliance on single assets.

Catalysts

Operates as a consumer internet company in Africa, Asia, Europe, and internationally.

• Heightened global regulatory scrutiny, particularly in China, poses a serious ongoing risk to Naspers' largest asset, Tencent. Should Chinese or other international regulatory bodies take further action (such as imposing stricter restrictions on data, AI, or monopolistic practices), this could severely constrain Tencent's revenue and earnings growth, which would in turn depress Naspers' consolidated earnings.
  
• Naspers remains overexposed to geopolitical tensions, especially economic decoupling between the United States, China, and emerging markets. This rising friction could limit future international expansion opportunities and hinder the group's ability to deploy its available capital into high-growth new tech assets, thus curtailing longer-term revenue diversification and growth.
  
• Despite the company's strong recent growth, persistent heavy reliance on Tencent dividends continues to present significant concentration risk. Any material underperformance or regulatory clampdown at Tencent will disproportionately impact Naspers' net income, undermining management's ambition to accelerate growth from non-Tencent operations and resulting in unpredictable earnings.
  
• Naspers' sprawling conglomerate structure and complex cross-holdings with Prosus continue to attract investor skepticism and could sustain or widen the persistent holding company discount. If management fails to resolve this, the company's ability to unlock shareholder value and raise new capital cheaply will be structurally hampered, suppressing both future net margins and equity valuation.
  
• Intensifying competitive and regulatory pressures in the e-commerce, classified, and food delivery sectors-particularly from local and global tech giants-are likely to require escalating investment to maintain market share. This will likely erode operating leverage and future net margins across Naspers' portfolio companies, constraining consolidated earnings growth even if top-line revenues continue to rise.

Naspers Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Naspers compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Naspers's revenue will grow by 10.8% annually over the next 3 years.
• The bearish analysts assume that profit margins will shrink from 74.8% today to 72.5% in 3 years time.
• The bearish analysts expect earnings to reach $7.1 billion (and earnings per share of $46.76) by about August 2028, up from $5.4 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 9.6x on those 2028 earnings, down from 9.7x today. This future PE is lower than the current PE for the GB Multiline Retail industry at 12.7x.
• Analysts expect the number of shares outstanding to decline by 6.98% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 21.02%, as per the Simply Wall St company report.

Naspers Future Earnings Per Share Growth

Risks

• Prosus (and by extension, Naspers) is demonstrating strong operational leverage and disciplined cost management, with substantial profit growth outpacing revenue growth in major segments like iFood and OLX, indicating the potential for sustained improvement in net margins and overall earnings.
  
• The company is aggressively investing in AI-driven innovation to both enhance internal efficiencies and create proprietary technology models, enabling better customer targeting, ecosystem integration and potentially unlocking major new sources of recurring revenue and higher margins.
  
• Prosus has significant M&A firepower, with over $10 billion in available cash, and clear strategic focus on ecosystem-building in Latin America, India, and Europe, suggesting they can continue to acquire, integrate, and scale high-growth digital businesses that expand addressable revenue pools and reduce over-reliance on Tencent.
  
• Momentum in cross-selling, loyalty programs, and ecosystem synergy (such as the integration of Despegar with iFood and leveraging payment/fintech adjacencies) are expected to drive higher user retention, frequency, and total customer lifetime value-directly supporting higher revenue growth and cash generation over time.
  
• The management team is prioritizing cultural transformation, speed of execution and transparency, which is already translating into faster decision-making, successful integrations, and the ability to scale innovations across operating companies-this cultural change supports the likelihood of delivering improved revenue growth and profitability in the long run.

Valuation

• The assumed bearish price target for Naspers is ZAR5295.04, which represents two standard deviations below the consensus price target of ZAR7009.02. This valuation is based on what can be assumed as the expectations of Naspers's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ZAR8047.26, and the most bearish reporting a price target of just ZAR5278.6.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $9.8 billion, earnings will come to $7.1 billion, and it would be trading on a PE ratio of 9.6x, assuming you use a discount rate of 21.0%.
  
• Given the current share price of ZAR5811.92, the bearish analyst price target of ZAR5295.04 is 9.8% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.