One way to evaluate the performance of a company is to compare its book value and market value. Book value is the net asset value of a company, calculated by subtracting its total liabilities from its total assets. Market value is the current price of a company’s shares multiplied by the number of shares outstanding. Tencent is one of the largest technology companies in China, with a diversified portfolio of online services, gaming, social media, e-commerce and cloud computing.
According to YCharts, Tencent’s book value per share as of December 29, 2023 was $3.411. On the other hand, according to Google Finance, Tencent’s market price as of December 29, 2023 was $37.79 (traded in the US as an American Depositary Receipt (ADR)).
Comparing the book value and market value of Tencent at the end of 2023 reveals that the company had a very high market-to-book ratio of about 11.08. This indicates that investors had high expectations for Tencent’s future growth and profitability, and that they were willing to pay a premium for its shares. A high market-to-book ratio can also reflect that a company has intangible assets that are not captured by its book value, such as brand recognition, customer loyalty and intellectual property.