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China's Tencent takes 12% stake in Snapchat parent
[NEW YORK] Snapchat parent Snap Inc disclosed Wednesday that Chinese tech giant Tencent had taken a 12 per cent stake, in a sign of confidence in the social network which has delivered disappointing results since its share offering this year.
A securities filing showed Tencent Holdings had purchased some 146 million shares of Snap non-voting stock in open market purchases in November.
Those shares would be worth some US$220 million at Snap's current value, or 12 per cent of the equity.
Snap, whose social network and disappearing messages has made it a hit with young smartphone users, has seen its share price slump amid disappointing results including another quarterly update Tuesday showing its losses tripled to US$443 million.
Shares in Snap fell some 16 percent in after-market trades following the results, but the disclosure on Tencent could provide a lift.
Snap reported the number of daily Snapchat users rose to 178 million in the past quarter, a weaker-than-expected 17 per cent increase from a year ago.
Although Snapchat is best known for its smartphone messaging, it has also developed partnerships with numerous media outlets eager to reach its audience with news, video and other content.
Snap executives said they overestimated demand for its Spectacles sunglasses with built-in cameras, losing just shy of US$40 million that it will mark down on its books.
Tencent is one of China's largest tech firms, known for its WeChat social network and investments in media, gaming, online content and other segments.
Tencent shares have rocketed 70 per cent this year on expectations of continued success in its core games business, which includes the wildly popular "Honour of Kings" and other hits, and on hopes that it will realize the advertising potential of the widely used WeChat.