Tencent shares soared to a more than two-year high on Thursday after reporting first-quarter earnings that beat expectations.
However, the Hong Kong-listed shares of the Chinese technology giant gave up some gains to close 0.23% higher, after a volatile session that saw its stock price swing between positive and negative territory
Tencent shares had earlier hit an intra-day high of 447 Hong Kong dollars ($57.67), putting the shares around 4% higher from Wednesday's closing price. That was the highest level since an intra-day high of $458.96 Hong Kong dollars on March 22, 2018.
On Wednesday after the Hong Kong market close, Tencent said revenue for the March quarter totaled 108 billion Chinese yuan ($15.2 billion) representing a 26% year-on-year rise. Profit attributable to equity holders of the company hit 28.9 billion yuan. Both figures beat analyst forecasts.
The coronavirus epidemic swept across China earlier this year leading to the country effectively being locked down. People stuck at home turned to smartphone games for entertainment which gave Tencent a boost as the country's largest game maker. Online games revenue grew 31% year-on-year to 37.3 billion yuan in the first quarter, with the bulk of that coming from mobile games.
Meanwhile, Tencent's advertising business, which was a worry going into the earnings report, held up well.
However, the company flagged some potential headwinds going forward.
In a statement, Tencent said it expects "in-game consumption activities to largely normalise as people return to work" adding that it sees "some headwinds for the online advertising industry."