New York: Snapchat parent Snap Inc disclosed that Chinese tech giant Tencent had taken a 12 per cent stake, a sign of confidence in the social network that 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 $220 million at Snap’s current value, or 12 per cent of the equity.
Brian Wieser at Pivotal Research said the Tencent investment should not impact Snap’s valuation even if it conveys some confidence in the US firm.
“It seems highly unlikely that Tencent would ever be in a position to buy the whole company,” he said in a note to clients.
“It seems equally unlikely that Snap would ever be allowed to establish a foothold in China even if their relationship with Tencent were deeper.”
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 on Tuesday showing its losses tripled to $443 million.
Snap shares skidded 14.6 per cent to close at $12.91, as the news on Tencent did little to stem the decline.
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. — AFP
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