Tencent Shares Plummet After US Blacklisting: What's Next for the Gaming Giant?

Tencent Holdings Ltd. (HKG: 0700) shares tumbled Monday after the U.S. Department of Defense added the Chinese tech giant to its list of companies with alleged ties to the Chinese military. The designation, which does not impose immediate bans or sanctions, has raised concerns about Tencent's ability to do business with U.S. companies and its potential impact on the gaming industry. Here's what investors need to know about the recent developments and the potential long-term implications for Tencent's gaming and technology divisions.



Tencent's shares fell by 8% to 9.8% following the news, indicating investor concern about the potential impact on its business. The designation could harm Tencent's reputation and make U.S.-based companies cautious about doing business with them, as seen in the case of DJI, a Chinese drone maker previously added to the list. DJI faced lost business deals and a stigma as a national security threat after its designation (The Verge, 2025).

The designation could have several long-term implications for Tencent's gaming and technology divisions. Here are some potential impacts, supported by data and quotes from the provided materials:

1. Reputation and Business Relationships:
- The designation could harm Tencent's reputation and make U.S.-based companies cautious about doing business with them.
- Tencent's shares fell by 8% to 9.8% following the news, indicating investor concern about the potential impact on its business (The Verge, 2025).

2. Gaming Industry Impact:
- Tencent owns shares in over 600 companies, including major gaming publishers like Epic Games, Larian Studios, FromSoftware, and Ubisoft, as well as outright ownership of studios like Riot Games and Grinding Gear Games (The Verge, 2025).
- The designation could affect how these companies do business with U.S. consumers, potentially impacting microtransactions that fund free-to-play games like League of Legends and Path of Exile (The Verge, 2025).
- Tencent's gaming division is a significant revenue driver, and any restrictions on its operations could have a substantial impact on the company's overall financial performance.

3. Technology and Intellectual Property:
- The designation could carry significant implications for Tencent on trade, technology, and intellectual property, as mentioned in the FT article (2025).
- Tencent's technology division is involved in various sectors, including AI, cloud computing, and fintech. Any restrictions on its operations or collaborations with U.S. companies could hinder its innovation and growth in these areas.

4. Potential Regulatory Challenges:
- The designation was made under the Thornberry Authorization Act, which followed an executive order issued by then-President Trump in late 2020, prohibiting U.S. entities from investing in companies with ties to the Chinese military (FT, 2025).
- Tencent may face regulatory challenges and potential restrictions on its operations in the U.S., similar to those faced by DJI and other designated companies.



In conclusion, the long-term implications for Tencent's gaming and technology divisions due to the designation could include reputational damage, potential restrictions on business relationships, impacts on the gaming industry, challenges in the technology sector, and regulatory hurdles. These factors could collectively hinder Tencent's growth and competitiveness in the global market.

Despite the recent blacklisting, Tencent's share buyback strategy could potentially influence its stock price and market capitalization by increasing EPS, offsetting selling pressure, contributing to a potential stock price recovery, and maintaining or even increasing its market capitalization. However, the recent blacklisting may have a short-term impact on its stock price, and continued caution regarding Tencent's stock seems warranted, especially given the ongoing economic malaise in China.

Investors should closely monitor the situation and consider the potential long-term implications for Tencent's gaming and technology divisions. As the U.S.-China tech cold war continues, companies like Tencent may face ongoing challenges and uncertainties that could impact their ability to invest in and collaborate with U.S. companies, as well as their access to U.S. markets and technology.