Tencent won't "split up".

Two and a half years after "unbundling" JD.com and Meituan from its investment matrix, Tencent is quietly entering a new cycle of "integration."

In mid-June, Tencent Music announced that it would acquire the online audio platform Himalaya in a full takeover, paying $1.26 billion in cash and offering up to 5.1986% of Tencent Music's shares. Calculated in this way, the total scale of this transaction is approximately 20.5 billion yuan.

Tencent is an old shareholder of Himalaya and has participated in multiple rounds of investment in the latter. In April last year, Himalaya submitted a prospectus for its Hong Kong IPO, and Tencent held a 5.33% stake through its subsidiary. However, Himalaya's attempt to go public ended in failure, and it was acquired by Tencent Music more than a year later.

Earlier, Tencent also participated in the investment in another "old friend," Wanda.

At the end of May, Tencent joined hands with PAG Zhuhai, Gaohe Fengde, JD Panda, Sunshine Life Insurance, and other companies to establish a joint venture to acquire 48 Wanda Plaza projects under Dalian Wanda Commercial Management, which are located in first - and second-tier cities such as Beijing, Guangzhou, Chengdu, and Hangzhou.

Tencent has a long - standing relationship with Wanda. As early as 2018, Tencent, together with JD.com, Suning, and Sunac, invested 34 billion yuan in Wanda, with Tencent contributing 10 billion yuan. Now, as Wanda intends to sell assets to pay off debts, Tencent has stepped in to take over again.

Tencent has spent 20 billion yuan in half a month, showing signs of expanding its territory again.

Between 2021 and 2022, Tencent adopted a strategy of "unbundling." It sold off a large number of its stakes in invested companies. First, at the end of 2021, it distributed its JD.com shares to shareholders, reducing its stake from 17% to 2.3%. Then, in November 2022, it distributed its Meituan shares, reducing its stake from 17% to less than 2%.

In addition, Tencent liquidated its shares in some small and medium - sized companies. For example, in June 2021, it sold a large number of shares in New Oriental Online, cashing out approximately HK$700 million and reducing its stake from 9% to 1.6%. In January this year, it significantly reduced its stakes in Weimob and Ubtech, cashing out a total of HK$1.66 billion.

Now, Tencent's large - scale acquisitions of Himalaya and Wanda Plaza are a microcosm of this internet giant, known for its investment prowess, shifting from contraction to expansion.

Since "unbundling" Meituan at the end of 2022, the number of Tencent's investment deals has significantly decreased. From more than 300 deals per year at its peak, it shrank to about 40 in 2023 and more than 20 in 2024, with nearly half being additional investments in existing projects. At the same time, Tencent's stakes in major invested companies have remained relatively stable, and there have been no more large - scale dividend distributions like those of JD.com and Meituan.

Take Pinduoduo as an example. In 2022, 2023, and 2024, Tencent's stake in the company remained at around 14%. In other "mid - tier" companies such as Kuaishou, Bilibili, and Zhihu, Tencent holds about 10% - 15% of the shares, which have not changed much in recent years. The high - profile "unbundling" has actually been put on hold.

In 2025, despite liquidating some small companies, Tencent has shown a more aggressive stance.

In the gaming sector, Tencent invested 1.16 billion euros in a new company under Ubisoft and became the largest shareholder of Kuro Game, a domestic second - generation gaming company. Recently, there have also been acquisition rumors between Tencent and South Korean gaming giant NEXON, with the rumored offer as high as $15 billion.

Meanwhile, Tencent has been actively investing in the fields of AI, robotics, and biomedicine. It has successively invested in AI companies such as DarkSide, Zhipu AI, MiniMax, and Baichuan Intelligence; robotics companies such as ZHIYUAN ROBOTICS, Yunji Technology, and Yunjing Intelligence; and medical technology companies such as Libang Medicine and Kunwei Technology. It even served as a limited partner, contributing 200 million yuan to establish a new fund.

Two or three years ago, Tencent chose to "unbundle" JD.com and Meituan to ease regulatory pressure and appease investors after the stock price plummeted. Now, with the recovery of its own performance and stock price, and the increasing threat from ByteDance, the benefits of "integration" for Tencent are significantly greater than those of "unbundling," and a reverse flow of funds has quietly begun.

A

Tencent's "unbundling" four years ago was an explanation to investors during the continuously falling stock price.

Tencent has always been good at building a large - scale business empire through investment. The capital market also favors Tencent for its investment capabilities. In January 2021, Tencent's stock price once soared above HK$700, reaching a record high, and the company's market value approached $1 trillion.

Throughout 2021, Tencent's investment machine continued to roar. In the gaming sector alone, about 92 domestic and foreign companies received Tencent's investment.

However, in the following two years, Tencent's stock price continued to decline, once falling below HK$200, a 70% drop from the peak, the largest drawdown since its listing.

The "high - dive" of Tencent's stock price was against the backdrop of a tightening regulatory environment at that time.

In 2021 alone, Tencent received multiple fines, mostly for "illegally implementing concentration of business operators without due declaration."

An even greater setback was that in July of that year, after a six - month review, the merger of Huya and Douyu, two major gaming live - streaming platforms strongly promoted by Tencent, was finally halted.

The fines and the halted merger clearly indicated that Tencent's capital - driven expansion was becoming increasingly out of place.

At the year - end staff meeting in 2021, Pony Ma said that Tencent was just an ordinary company during the country's social development and a beneficiary of the national development wave. It was not a basic service and could be replaced at any time. In the future, when serving the country and society, Tencent should fulfill its responsibilities without overstepping its boundaries and act as an assistant and a connector.

Almost simultaneously with the change in the regulatory environment, Tencent also faced challenges such as the suspension of game license issuance and the reduction of its stake by major shareholder Naspers. As a result, its stock price plunged from the peak.

In this context, Tencent's decision to distribute JD.com and Meituan shares could immediately appease investors.

Based on the stock prices of JD.com and Meituan at that time, the value of the JD.com shares distributed by Tencent to shareholders was HK$127.7 billion, and the value of the Meituan shares was HK$155.4 billion, totaling HK$283.1 billion. In contrast, Tencent's share repurchase amount in the Hong Kong stock market in 2021 was only HK$2.6 billion.

However, over the past two years, the internal and external environment faced by Tencent has changed significantly. Most companies have completed their compliance rectifications, and "interconnectivity" has become a new focus in the industry. In Tencent's core business, the issuance of game licenses has returned to normal, and Tencent has new stories to tell, such as Video Account and AI.

These changes have quickly been reflected in the stock price. In 2023, Tencent's stock price fluctuated between HK$200 and HK$300. After 2024, with the gradual release of positive news about Video Account, AI, and new games, Tencent's stock price has been on an upward trend, rising from below HK$300 to about HK$500, a cumulative increase of more than 65%.

In terms of rewarding shareholders, with strong cash flow, Tencent no longer needs to distribute shares of invested companies. Instead, it has been providing returns through share repurchases in the past two and a half years.

From 2021 to 2024, Tencent's share repurchase amounts were HK$2.6 billion, HK$33.8 billion, HK$49.4 billion, and HK$112 billion respectively. In the first quarter of this year, Tencent repurchased shares worth more than HK$17.1 billion, a 16% increase year - on - year, and it is expected to repurchase HK$80 billion for the whole year.

Meanwhile, Tencent has cancelled the repurchased shares, reducing the total share capital by nearly 400 million shares since the end of 2021. This has also objectively supported the rise of the stock price.

Moreover, the stock prices of most of Tencent's invested companies have been sluggish in the past two years, including Pinduoduo. If Tencent were to distribute the shares of these companies again, neither Tencent nor investors would be likely to profit. In fact, in recent quarters, even when the performance of invested companies was poor, Tencent did not choose to reduce its stakes.

As time has passed, influenced by internal and external factors, Tencent has closed the "unbundling" window and is unlikely to liquidate another company in the short to medium term; the invested companies can also breathe a sigh of relief for now.

B

No longer "unbundling," Tencent, while continuing to invest in its traditional gaming business and cutting - edge technologies, has also begun to extend its capital reach to traditional areas of the Internet.

Before this year, the number of Tencent's investment deals decreased year by year. According to Qichacha, as of November last year, Tencent had only made 16 investments, mainly in the fields of AI, healthcare, manufacturing, and gaming. In fact, Tencent's investment and acquisition activities since 2021 have mainly revolved around these sectors. Few "traditional" startups have caught its attention.

Since 2025, Tencent has not only increased the frequency of its investments but also expanded its investment scope, making a rare large - scale move like the acquisition of Himalaya.

Investing in gaming companies to obtain game IPs and operation rights is a well - established strategy for Tencent, which has hardly stopped in the past decade. Increasing investment in innovative businesses such as AI is an attempt to capture the next technological trend. The acquisition of Himalaya at a cost of tens of billions of yuan is a new move by Tencent to consolidate its dominance in the "old world" of the Internet.

Judging from indicators such as growth potential and profitability, although Himalaya is one of the largest podcast platforms, it is still not an outstanding investment target.

According to Himalaya's previous prospectus, from 2021 to 2023, the company's revenue fluctuated around 6 billion yuan, and the year - on - year growth rate of its revenue in 2023 was only 1.7%. In terms of profitability, the company's adjusted net profits were - 718 million yuan, - 296 million yuan, and 224 million yuan respectively, which were also far from excellent.

The podcast industry in which Himalaya operates has long lost its allure as the "ear economy." According to a report by market research firm Statista, the advertising revenue of the Chinese podcast market in 2024 was approximately 3.3 billion yuan. In contrast, Tencent's marketing service revenue in 2024 reached as high as 121.4 billion yuan.

In the era of fast - paced content consumption where attention is measured in seconds, the long - time consumption, slow - paced narrative, and high cognitive threshold of podcasts are insurmountable drawbacks. This has made it difficult for podcast content and creators to break into the mainstream, leaving this content form in a niche circle with limited commercial value and an unpromising future.

However, Tencent still chose to acquire Himalaya at a cost of tens of billions of yuan. Seeking incremental users from third - party user pools may be the motivation behind this unusual business decision.

It is an established fact that Tencent's own user pool has been growing slowly. In the first quarter of this year, the combined monthly active users (MAU) of WeChat and WeChat International reached 1.402 billion, a 3% increase year - on - year and a 1% increase quarter - on - quarter. The MAU of QQ's mobile version was 534 million, a 3% decrease year - on - year and a 2% increase quarter - on - quarter.

In this context, Tencent Music, Tencent's "offspring," has also faced difficulties in growth. In the first quarter of this year, Tencent Music's MAU decreased by 4% year - on - year to 555 million, showing a decline for two consecutive quarters.

Against this background, it is not difficult to understand why Tencent Music used cash and equity to acquire Himalaya, which has mediocre financial performance. After all, Himalaya claimed in its prospectus that it had achieved an MAU of 303 million in 2023. If a portion of these users could be converted into Tencent Music's users, the latter would gain new growth momentum.

Considering the entire Tencent ecosystem, obtaining low - cost, low - overlap traffic from external sources is currently a necessity for all of Tencent's business segments.

Tencent has recently been actively developing AI and e - commerce and has opened up traffic channels such as WeChat and QQ. However, as mentioned above, the growth of these two major traffic pools has slowed to a single - digit percentage. For Tencent's in - house businesses such as AI to acquire enough new users, they cannot rely solely on the natural growth of the traffic pools. Instead, they need to increase traffic acquisition and conversion through means such as increasing exposure and embedding basic services, which is inefficient and may even affect the user experience of WeChat and QQ.

In contrast, it is easier to achieve twice the result with half the effort by attracting traffic from third - party platforms like Himalaya. In the past, Tencent's various businesses attracted new users from Himalaya through advertising. After the acquisition, the hassle of cross - app traffic transfer will be reduced, and the cost of attracting new users is also expected to decrease.

In the past two or three years, Tencent has not "unbundled" invested companies with a large number of users, such as Kuaishou, Bilibili, and Zhihu. In addition to unfavorable timing and inappropriate prices, it may also have the intention of preserving third - party traffic sources and stabilizing the overall traffic of the Tencent ecosystem.

On the other hand, after a brief period of peace in the Internet industry, with the arrival of the era of large - scale AI models, competition among major Internet companies has become unprecedentedly fierce. In addition to the intense competition in the AI field, Tencent also needs to fight on multiple fronts in e - commerce, gaming, local services, cloud computing, etc., and traffic is the most important fuel in the Internet war.

Influenced by internal and external factors, Tencent's shift from "unbundling" to "integration" can enhance its ecosystem's combat capabilities. Before 2025, Tencent simply stopped "unbundling." Now, with Tencent Music's acquisition of Himalaya, Tencent is moving towards "integration."

C

In the process of Tencent growing into a giant company, it has always had an inherent drive for "