$3,700 Tencent investment now worth $3.5m

Business | 22 Jan 2021

Tencent's (0700) share price hit a new record high of HK$700 yesterday, which means a HK$3,700 investment in Tencent's 2004 initial public offering is now worth as much as HK$3.5 million.

The stock has an astonishing compound annual growth rate of 53.45 percent - but this is still lower than fast-growing US electric carmaker Tesla's 65.20 percent CAGR.

Tencent's initial share price per board lot was HK$3,700, now worth around HK$3.5 million, translates into 944 percent growth, or a profit of HK$3,496,300 over 16 years.

Tencent, also known as the "stock king," went public in June 2004, at HK$3.7 per share, the top end of the indicative price range, with 1,000 shares per lot.

When the stock rose above HK$50 three years later, Tencent lowered the number of shares per board lot from 1,000 to 200 shares, before further decreasing it to 100 shares in 2009 when the price jumped above HK$100. After that, the mainland internet giant split its shares in a five-for-one exchange in 2014.

Excluding the breakdown factor, Tencent's stock price after the restoration was HK$3,500 per share yesterday.

Meanwhile, in the US market, Tesla's share price rose from its initial offering price at US$17 (HK$132.6) in June 2010 to US$850.45 yesterday, after the company also split its stock in a five-for-one exchange last year.

The share price after the restoration was US$4,252.25, translating into 248 percent growth in a little under 11 years. It also represents a profit of US$4,235.25 per share.

Investors who bought Tesla at its IPO price, have also become multi-millionaires. Over a decade later, a US$17,000 investment, or 1,000 shares, made in 2010 would be worth as much as US$4.25 million, according to The Standard's calculations.

Tesla's shares surged over 700 percent in 2020.

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