Gaming giant, Tencent Holdings Ltd’s shares dropped almost 10% on Tuesday after Chinese state media labelled online video games “spiritual opium”.
According to Reuters, the video game firm saw its stock tumble more than 10% in morning trade, wiping almost $60 billion from its market capitalization. This is the first time in 10 years that the company’s shares are dipping so much.
Tencent’s rival company NetEase saw a drop of 15.7%, while game developers XD Inc and GMGE Technology Group Ltd also saw a dip in the shares. NetEase declined to comment. Tencent was not immediately available for comment, CNBC reported.
Economic Information Daily, a state-run publication, in an article on Tuesday said many teenagers were addicted to online video games and called for more curbs on the industry.
Daniel Ahmad, senior analyst at Niko Partners told CNBC, “The article brought attention to gaming addiction among minors. It is reminiscent of older articles where video games were compared to digital heroin.”
“The timing of the article has raised concern among investors given the recent crackdown on tech companies and the education/tutoring sector,” he further added.
Both Tencent and NetEase had introduced measures to protect young players against addiction. According to CNBC, Last month, Tencent introduced a facial recognition feature on smartphones to verify that the gamer is an adult.
