A pedestrian walks past Tencent Holdings's headquarters in Shenzhen, China. Qilai Shen | Bloomberg | Getty Images

Chinese technology firm Tencent has lost over $178 billion in value since shares hit a record high in January, making it one of the worst-performing major technology stocks. Shares of Asia's most valuable firm hit an all-time high of 474.6 Hong Kong dollars on January 23. But since then shares have slid 31 percent over worries about the company's core gaming business. Tencent's market capitalization has fallen from that record high of over $573.3 billion to $394.9 billion, marking a more than $178 billion slide in value. That's equivalent to losing more than a whole Netflix, which is valued at $142 billion, or just over two Goldman Sachs, which is valued at $86.6 billion. But how did one of the hottest tech stocks of 2017 turn sour with investors this year? Coming into 2018, the market was excited about the prospects for Tencent, the largest gaming business in the world and the owner of China's most popular messaging app, WeChat, which has over a billion users. Investors believed that this, along with the stellar growth the company showed, would propel Tencent shares higher. There are no "sell" ratings on Tencent's stock, with analysts on average expecting the stock to go to 477.25 Hong Kong dollars, according to Reuters data. However, the last few months have been tough for the company.

"The stock went from being priced at a discount to global peers such as Facebook to a premium, making the company susceptible to profit-taking on any signs of slowdown of declining metrics," Neil Campling, co-head of the global thematic group at Mirabaud Securities, told CNBC on Thursday. "The recent challenges of regulation bottlenecks, tough growth comparisons, multiple compression at said peers, investment growth hitting margins, and rotation of equity flows from emerging markets to U.S. equities, have all conspired to hit the stock."

Trade war

Chinese stocks have been under pressure because of the trade war between the U.S. and China. Tencent, as China's biggest technology firm, has taken a beating, but so have the country's broader stock indices. Even though Tencent doesn't have a major business in the U.S., the broader worry is that the trade issues could impact the growth of these companies.

Gaming business slowdown

Online games is a huge part of Tencent's business and accounts for nearly 40 percent of revenues. This has been a big growth driver and the Chinese firm has continued to bring popular hit games into the market. But it has faced a regulatory crackdown from Beijing which is stopping Tencent making money from games. A mega-hit known as "PlayerUnknown's Battlegrounds," or PUBG, a massive multiplayer online game that Tencent has the rights to run in China, is waiting approval so the Chinese tech giant can monetize it. Another title called "Honor of Kings," which is one of the highest-grossing mobile games in China, has also faced scrutiny. Last year, Tencent moved to put a limit on the amount of time children could spend on the game because of complaints from authorities that kids were becoming addicted. And the latest issue came when regulators stopped Tencent from selling "Monster Hunter: World," a popular online game created by Japanese gaming firm Capcom. Tencent has the license to sell it in China. The result was that Tencent's second-quarter earnings showed that smartphone game revenues had fallen 19 percent from the previous quarter. Daily active users increased but the amount of revenue it made did not because of the issues with monetization. It led to a surprise drop in profit for the first time in nearly 13 years. But analysts are positive that the issue will be overcome shortly. "The conference call, just concluded, was constructive and the company make clear that the regulation situation is temporary. Games with prior approval can be launched and monetized (15 games in Tencent's pipeline are like this)," Campling said in a separate note.

Where next for the stock?

The recent hiccups haven't deterred analysts from remaining positive on the Tencent story. While there will still be short-term pain for Tencent, it has a healthy business with several revenue strands, according to a note from Northern Trust Capital Markets.