Johannesburg - Naspers has started the year on the back foot with its share price falling more than 20 percent since December as investors reduce risk appetite and companies invested in China take a knock.
The internet and media group’s shares have dropped from a peak of R2 233 in November to trade almost 25 percent lower.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said: “People are reducing risk appetite and are selling those (technology) stocks. Naspers is not the only company that has experienced this. A number of the internet-listed companies in the world have come down dramatically; Amazon has shed 24 percent, Twitter 27 percent and Naspers 20 percent since the end of December.”
The slowdown in China’s economy weighed heavily on Naspers, which holds a 34.4 percent stake in Tencent Holdings, a R852.1 billion internet and media giant.
Naspers is the fourth largest company by market capitalisation listed on the JSE, with a market capitalisation of more than R785bn.
China’s economy has slowed down in the past two years as it has failed to maintain its 8 percent growth.
“The devaluation of the yuan had a negative effect and Tencent dropped by 10 percent. Naspers holds a significant stake in the company, so its share price responded,” Takaendesa added.
The portfolio manager said competition for Naspers’ video streaming service ShowMax from Netflix and the heavy concentration on one share, like Naspers, to form about 15 percent or 16 percent of the of the all share index could also have contributed to its falling share price. “This can be viewed as too risky and people might be reducing their holding. The first two reasons though are the big ones that have impacted the company’s share price.”
Naspers launched ShowMax, its competitor to internet streaming service Netflix, last year. ShowMax’s head of communications Richard Boorman said the company tried to differ by offering more services compared with its competitors.
“The experience in other markets has been that internet TV services are not necessarily mutually exclusive. It appears that people are willing to subscribe to more than one provider as long as each service offers their own unique mix of content.
“In our case, ShowMax has the largest subscription video catalogue in Africa, with more than 20 000 TV show episodes and movies, including Hollywood hits not available elsewhere, favourites from the UK, and extensive local content also not available on other services.
“In addition to content, the other key differentiators setting ShowMax apart are download functionality, cash payments and local partnerships.”
ShowMax and Netflix compete with Future TV, ONTAPtv and VU (formerly known as MTN FrontRow) for the subscription video-on-demand (SVOD) space in South Africa. Each has different offerings and monthly subscriptions rates.
“While we are not immune to the pressures of a challenging global economy (with some businesses affected more than others), a benefit of being a diversified group is that we are not exposed to any one business, country, currency or technology,” Naspers spokeswoman Meloy Horn said.
“In Africa, consumers are feeling the impact of the economic downturn, and because the significant weakening of currencies impact our dollar input costs, some of our short-term plans have changed. However, the long term outlook remains positive with a number of growth opportunities to come,” she added.
In October, the company announced a $1.2bn (R19.02bn) deal to become the largest shareholder in Avito, the leading online classifieds platform in Russia. After the news the company’s share price surged by 3.67 percent at the JSE to R2 030.62. The deal saw Naspers increasing its stake in Avito from 17.4 percent to 67.9 percent in a little over two years.
Yesterday the share price on the JSE was up 2.87 percent and closed at R1 790.