Is Tencent Stock Poised for Further Gains After Record $1B Offshore Bond Sale in 2025?

Trying to figure out what to do with Tencent Holdings stock right now? You are not alone. Over the past year, Tencent has been anything but boring. Shares have powered ahead by 42.9% in the last 12 months. Year to date, the return is an even more impressive 62.9%, while in just the past 30 days alone, Tencent has added nearly 12% to its share price. Even the last week saw a 2.7% bump, making it clear that investor sentiment is running strong.

So, what is fueling this momentum? Beyond solid fundamentals, several big news items are still moving the needle. Take Tencent’s recent offshore bond sales, for example, which broke records this year and underscore just how attractive the company’s financial position is seen by global investors. The announcement of a new fundraising deal and the high-profile recruitment of an AI expert from OpenAI have also added a jolt of excitement and perhaps a bit of FOMO for anyone watching from the sidelines.

But all this attention does not automatically mean the stock is a bargain. Tencent scores a 2 on our valuation check, meaning it appears undervalued in two out of six standard measures we look at. That is not a screaming buy, but it is not a red flag either, so it pays to dig deeper before making any big moves. Up next, we are going to break down those six valuation approaches and reveal where Tencent stands on each. Then, I will show you a more nuanced way to judge if this stock really deserves a spot in your portfolio.

Tencent Holdings scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Tencent Holdings Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a popular valuation tool that projects a company’s future cash flows and then discounts them back to present value. This approach helps estimate what the business is worth today, based on its ability to generate cash in future years.

Tencent Holdings’ latest twelve-month Free Cash Flow (FCF) is about CN¥201.4 billion. Looking ahead, analysts forecast strong growth, with FCF projected to rise to roughly CN¥321.7 billion by 2028. Although analyst estimates typically cover the next five years, Simply Wall St extends projections to 2035 by extrapolation to provide a long-term view of Tencent’s potential earning power.

By extrapolating these future cash flows and discounting them to present value, the intrinsic value per share is calculated to be about HK$763.12. Compared to the current market price, this represents an approximate 11.2% discount and suggests Tencent stock may be trading below its fair value at this time.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Tencent Holdings.

Our Discounted Cash Flow (DCF) analysis suggests Tencent Holdings is undervalued by 11.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Tencent Holdings Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a favored way to value profitable companies like Tencent Holdings, as it compares the current share price to the company’s earnings per share. It gives investors a quick sense of how much they are paying for each unit of earnings generated by the business. Generally, a higher PE can signal strong growth expectations, while a lower PE may reflect lower growth prospects or higher perceived risk.

Right now, Tencent’s PE ratio is 27x. For context, this compares to an industry average PE of 24x for Interactive Media and Services companies, and a peer average of 26x. This suggests the market is willing to pay a slight premium for Tencent’s earnings compared to many of its direct competitors and the sector as a whole. However, premiums or discounts alone do not tell the whole story.

Simply Wall St’s Fair Ratio takes things up a notch. This proprietary metric adjusts for critical factors such as Tencent’s expected earnings growth, profit margins, market cap, industry, and any company-specific risks. Because it goes beyond basic averages and considers these company traits, it is a more reliable reference point than a simple peer or sector comparison. For Tencent, the calculated Fair PE Ratio is 34.7x.

With Tencent trading at 27x, which is well below its Fair Ratio of 34.7x, the stock appears to be undervalued when viewed through this lens.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Tencent Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. Narratives are a smarter, more dynamic approach that lets you tie your personal view of Tencent Holdings, the story you believe about its future, directly to concrete forecasts and valuations. Instead of just crunching numbers, Narratives let you express your perspective on revenue growth, profit margins, and risks, then instantly see what fair value that story suggests for the stock.

This approach connects the company's journey, whether driven by AI advancements, global expansion, regulation, or new product launches, to financial forecasts and a justifiable price. This makes it much easier to decide when Tencent shares are truly a buy or a sell. Narratives are easy to explore and create on Simply Wall St’s Community page, where millions of investors already share their views and update them as fresh news and earnings data arrive, ensuring your analysis stays relevant and current.

For example, some investors project robust AI-driven growth and see Tencent’s fair value near HK$814, while others anticipate more moderate progress and valuations as low as HK$508. These ranges highlight how Narratives reflect each investor’s unique outlook on Tencent’s future potential, risks, and financial reality.

For Tencent Holdings, we’ll make it really easy for you with previews of two leading Tencent Holdings Narratives:

🐂 Tencent Holdings Bull Case

Fair Value: HK$813.65

Current Price Discount: 16.7%

Projected Revenue Growth: 15%

• Sees Weixin and video accounts, gaming revival, fintech expansion, and global partnerships as major drivers for sustained high-margin growth.
• Assumes AI innovation will improve operational efficiency across segments, keeping compounded annual revenue growth high even as margins moderate to 22% due to competition and marketing spend.
• Downplays risk from regulatory moves outside China, noting international earnings are limited, while acknowledging ongoing rivalry with major Chinese tech firms and startups.

🐻 Tencent Holdings Bear Case

Fair Value: HK$508.40

Current Price Premium: 33.3%

Projected Revenue Growth: 12%

• Highlights cloud services, gaming, fintech, and social media as catalyst areas, but tempers this with significant strategic, regulatory, and execution risks.
• Warns that heightened government regulation, intense competition from domestic and global tech players, and overexposure to gaming revenue could limit upside.
• Cautions that while technology and global investments bring diversification, there are clear risks from privacy, geopolitics, innovation spend, and economic slowdowns.

Do you think there's more to the story for Tencent Holdings? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com