Prosus' Strategic Pivot: Tencent Value and E-Commerce Profits Signal a Buying Opportunity

As Prosus navigates its leadership transition and shifts toward operational tech dominance, investors are presented with a rare convergence of undervaluation, strategic clarity, and catalyst-driven upside. With its e-commerce division achieving its first annual profit and its iconic Tencent stake poised to amplify returns, the company's transformation offers a compelling entry point for investors willing to act decisively.

Leadership Transition & Strategic Shift: From Holdco to Operator

The appointment of Fabricio Bloisi as CEO in July 彷2024 marked a pivotal shift for Prosus. Replacing Ervin Tu—whose interim tenure stabilized the company after Bob van Dijk's abrupt exit—Bloisi brings hands-on expertise from Prosus' iFood division, a Brazilian food-delivery giant that exemplifies the company's new operational focus. Under Bloisi, Prosus is shedding its legacy as a passive investor and transforming into an active operator of high-growth e-commerce platforms in Latin America, India, and Europe.

This pivot aligns with the completion of the long-awaited Naspers cross-holding unwind, eliminating a decades-old governance headache. The restructuring has freed management to focus on core assets, with e-commerce now a profit engine: in 2025, the division reported a $38 million net profit, a stunning reversal from a $413 million loss in 2024. This turnaround underscores the efficacy of cost-cutting and scaling initiatives, positioning Prosus to capitalize on its dominant market positions in food delivery (via iFood, Swiggy, and Just Eat Takeaway.com) and payments (PayU, eMAG).

The Tencent Stake: Core Asset or Liability?

Prosus's 24% stake in Tencent remains its financial bedrock, representing 80% of its $177 billion net asset value (NAV) as of early 2025. While geopolitical risks loom—exemplified by the U.S. Pentagon's “military in nature” designation in January 2025—the Tencent stake's fundamentals remain robust. Tencent's Q1 2025 revenue surged 13% year-over-year, with operating margins expanding to 28%, and its P/E ratio of 17.7x for 2025 earnings appears undemanding.

Prosus's disciplined capital allocation has further enhanced shareholder value. By monetizing portions of its Tencent stake—generating $33 billion over 18 months—the company has funded a $36 billion buyback program, reducing its free float by 25% and creating a 10% NAV accretion per share. This strategy has narrowed Prosus's persistent NAV discount, though it persists at around 20%, offering a margin of safety for investors.

E-Commerce Turnaround: Profitability Unlocked

Prosus's shift to operational excellence is most evident in its e-commerce division. Bloisi's focus on unit economics and cross-border synergies—evident in the €4.1 billion acquisition of Just Eat Takeaway.com—aims to replicate iFood's success across Europe. While this deal faced skepticism due to Prosus's mixed M&A track record, the move consolidates its leadership in food delivery, a sector with 15% annual growth potential.

The division's 2025 profit milestone is no fluke: food delivery and fintech assets (PayU, eMAG) generated $500 million in EBIT for FY2026, with margins set to expand further. Prosus's open-ended buyback program continues to reward shareholders, with ~$2 billion allocated in early 2025 alone.

Risks and Market Sentiment: Navigating the Headwinds

Despite the positives, risks abound. The U.S.-China tech rivalry could constrain Tencent's growth, while Prosus's NAV discount—though narrowing—remains vulnerable to macroeconomic volatility. The Just Eat acquisition, while strategic, faces execution risks: integrating the firm's European operations with iFood's AI-driven logistics could test management's operational prowess.

Investment Case: Why Act Now?

Prosus's valuation gap is closing, but the stock remains undervalued relative to its asset base. With Tencent's stake compounding at a 15% CAGR and non-Tencent assets growing at 10%, Prosus's portfolio is projected to deliver a 14% annualized return. Key catalysts include:
1. Asset monetization: IPOs for high-growth businesses like PayU or iFood could unlock hidden value.
2. Regulatory clarity: Prosus's reduced exposure to Naspers governance issues and Tencent's ability to navigate U.S. scrutiny.
3. Buyback acceleration: A $18 billion cash pile enables continued repurchases, further narrowing the NAV discount.

The Bottom Line
Prosus stands at an inflection point. Its leadership transition has aligned strategy with execution, its e-commerce division has proven its mettle, and its Tencent stake—despite risks—remains a cash engine. For investors willing to overlook near-term volatility, Prosus offers a rare blend of value, growth, and catalyst-driven upside. The question isn't whether to act—it's why wait?

Act now while the valuation gap narrows and strategic execution gains momentum.