AFTER the giddy heights of January when its shares hit an all-time high, Tencent Holdings Ltd. has shed US$77 billion in value, as investors price in the costs of the Shenzhen-based Internet giant’s massive spending spree.

Results on Wednesday are expected to show that rising costs and investments will hurt profitability at Tencent, Asia’s biggest listed company. While Tencent has said sacrificing margins in the short-term is necessary to anchor future growth, analysts are concerned that the company isn’t yet able to make enough money from its mobile games to offset a decline in the desktop unit, its most profitable platform.

Tencent has been expanding into new businesses such as cloud computing and paying for fresh content, a strategy that contributed to a 72 percent surge in costs in the fourth quarter.

Analysts predict gross margin in the latest period dipped below 47 percent for the first time since 2003, the earliest figures available, according to the average of 11 estimates.

While they remain bullish on the stock, Citigroup Inc. and Deutsche Bank AG are among brokerages that have lowered their sales or earnings expectations in 2018.

“The short-term weak performance in PC games, coupled with larger payment-related subsidies and weaker ad seasonality, may affect the company’s margin,” China International Capital Corp. analyst Natalie Yue Wu wrote in a May 8 note. “We see a period of share price weakness due to game business.”

Shares of Tencent have slipped more than 10 percent since its high Jan. 23, declining more than twice as much as Hong Kong’s benchmark index.

Tencent ramped up spending this year, as it competes with e-commerce rival Alibaba Group Holding Ltd. on most fronts, including online entertainment, payments, cloud computing and even retail, Alibaba’s home turf.

Tencent’s retail-related deals this year include its backing of Carrefour SA’s China unit and leading a US$5.4 billion investment in Wanda Commercial Properties Co. (SD-Agencies)