Despite a recent report, Tencent (OTCMKTS:TCEHY) has denied that layoffs are in the works. Chinese internet leader Tencent is noted for its recent foray into the growing esports market. Recently, speculation arose that the company is preparing for some significant reductions in its extended reality (XR) unit.
However, rumors of the pending Tencent layoffs may be unfounded. Reuters reports that Chinese publication 36Kr broke the original story on Feb. 16, stating that the company planned on dissolving the entire XR team and gave the unit’s 300 employees “two months to find internal or external opportunities.” However, the outlet adds that Tencent has denied these claims, stating that it is simply “making adjustments” to some business operations.
How should TCEHY stock investors interpret this news, and what should they be expecting in 2023? Let’s take a closer look at what’s really going on.
Tencent Layoffs: Are They Happening?
If the information provided by Reuters is correct, there may not be any Tencent layoffs in the works. Per the outlet:
“Tencent, Asia’s biggest internet company, told Reuters that it was untrue that it planned to disband the business. It said it was making adjustments to some business teams as its development plans for hardware had changed.”
It’s easy to see why investors would be quick to believe the Tencent layoff rumors. Many tech companies, including DigitalOcean (NYSE:DOCN) and Wix (NASDAQ:WIX) have announced job cuts within the past week.
Plus, the company did admit that its “development plans for hardware” have changed. While the company is not disbanding the XR unit completely, it does appear to be taking a step back from its metaverse ambitions due to rising macroeconomic uncertainty.
However, as it stands, the company doesn’t seem to be planning any direct job cuts, opting to focus instead on some other restructuring measures. Today’s TCEHY stock declines can likely be attributed to negative market momentum rather than any company-specific news.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.