Snap reveals stake held by Chinese gaming giant Tencent

Snap CEO Evan Spiegel is a pariah on Wall Street, but he may have just gained a powerful friend in ꦍChina.

Snapchat’s struggling owner revealed Wednesday that Tencent Holdings — the Chinese social-media and gaming giant𒁃 controlled by billionaire Po🅘ny Ma — has taken a 12-percent stake in the company.

Details of the stake, revealed by Snap in a Wednesday filing after dismal quarterly results that showed steep losses an🌜d disappo♛inting user growth, h💖elped Snap shares recoup a slide of almost 20 percent in pre-market trading.

Snap shares early Wednes𝐆day were recently changing hands at $12.77, down 15.5 percent.

Snap’s largely privately owned structure, which reserves 95 percent of voting rights for its co-founders, madeꦫ it li♕kely Tencent was just accumulating a financial stake.

“While such news may be initially perceived as positive by the market, one has to remember that Tencent’s holdings in Snap is the non-voting Class A shares, which makes a possible acquisition of Snap🎀 by Tencent less likely,” said Morningstar analyst Ali Mogharabi.

Along with Alibaba and Baidu, Tencent has poured billions ౠof cash from a decade of growth in China into buying US firms and holds 5 percent ꦗof electric car maker Tesla, as well as stakes in ride service company Lyft and augmented reality startup Magic Leap.

The largest social media and gaming company in China and owner of the popular mobile application WeChat, it had previously inves♉ted in Snap through an affiliate in 2013, and has been referred as a “role model” by Snap’s co-founder and Chief Executive Evan Spiegel.

“The positive side of this could be that the two companies may create business partnership of some kind or Tenc🧸ent may aid Snap in expanding its reach into China,” Morningstar’s Mogharabi said.

Unlike many US stock market-listed corporations, Snap is not obligated to disclose changes in Tencent’s ownership of Snap’s Class A stock. Snap said it had only received the details of the stake from Teไncent this month and declined to answer further questions on the filing.

Snap, on Tuesday, reported third-quarter revenue and user growth well below Wall Street expectations, as it struggles to compete with Facebook Inc’s Instagram. Theಌ company has disappointed investors each quarter since it floated on the New York Stock Exchange in March.

Sn🌊ap’s daily active🍷 users stood at 178 million, below expectations of 181.8 million, according to research firm FactSet.

With Reuters