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| WeChat by Tencent Image from Google Play |
I've made very accurate predictions in the technology world: BYD fell to HK $13, Apple stocks crashed, Samsung thrived, Naver LINE beat Whatsapp, etc. Now I'm going to add one more. WeChat will not be a free app sooner than I think. Wanna know why?
Now I'll tell you why.
So, so what? Well, first, we need to know something. Messi is the 2nd highest earning footballer in the world according to Goal.com's The Goal Rich List 2013, in short, he earns "£251,000 a week, plus bonuses" as well as an "extremely lucrative sponsorship deals with a long-term relationship with the likes of Adidas (worth £2m a year)", just how much do you think it will take Messi to be on a 30 sec ad then? Don't know, but it's not going to be a "friendly" price for sure.
For one thing is that WeChat is owned by Tencent, a Hong Kong-listed Chinese company, and we all know "Chinese" kind of implies "cash" these days, and Messi knows this as much as we do. Thus we can deduce that the cost of hiring him will naturally be much higher than usual.
For another, sometimes even super brand like Adidas cannot get Messi to be in the ad. Don't get what I mean? Check out the video below.
What this video tells us is that you think you were watching Messi in the ad, but in fact you are watching a high school teacher playing football with his friends.
Now, imagine how much more Tencent has to pay than Adidas did to get Messi in the ad in real person. Second highest earning footballer in the world doesn't come cheap. So where should that money come from? Charging the app users would be a reasonable move.
Does Tencent have the money? Sure it has, tonnes, but does WeChat bring Tencent any actual income? Probably, but surely won't be as much as the money Tencent paid for Messi and other artists to promote WeChat.
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| Image from AAStocks |
Tencent definitely enjoys the success of WeChat, rewarding three intermediate-level executives with promotion. Development continues in the upcoming version 5.0 which will include a new online and offline payment function for the account holders to buy transport tickets and top-up mobile phone prepaid cards after purchases relevant services. All seem pretty promising, but at a stock price of HK$305.8, Price-to-Earning (PE) Ratio of 35.24 and an Earnings Per Share (EPS) of HK$8.678 (just 2.84% of the stock price), I'll say that buying it now is a risky business.
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| 3 year weekly stock history of Tencent Image from AAStocks |
Resources:
Messi on WeChat Ad - 30 sec @ YouTube
https://www.youtube.com/watch?v=CpyL9JveyhQ&feature=youtube_gdata_player
The Goal Rich List 2013 - 2. Lionel Messi (Barcelona) - £115.5m @ Goal.com
http://www.goal.com/en-gb/slideshow/2471/49/title/the-goal-rich-list-2013?ICID=OP
Lionel Messi’s body double is PE teacher from Canvey Island @ The Sun News
http://www.thesun.co.uk/sol/homepage/news/3452302/Lionel-Messis-body-double-is-brPE-teacher-from-Canvey-Island.html
Numerous executives at TENCENT (00700.HK)'s WeChat biz got promoted - report @ AAStocks
http://www.aastocks.com/EN/ltp/LTP_RT_Quote/HK6/NOW.551195.html
TENCENT (00700.HK) adds online, offline payment function to WeChat 5.0 version @ AAStocks
http://www.aastocks.com/EN/ltp/LTP_RT_Quote/HK6/NOW.551413.html
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