China’s Tencent, the company behind the popular messaging platform WeChat, has built a more than 10 per cent stake in Snap, the parent company of Snapchat, according to the US company’s latest quarterly filing.
The filing said that Tencent notified Snap that it built a position of 145.78m non-voting shares in the Los Angeles-based company in recent months.
Snap said it has been “inspired by the creativity and entrepreneurial spirit of Tencent and we are grateful to continue our longstanding and productive relationship that began over four years ago”.
It added: “For its part, Martin Lau, Tencent’s president, informed us that Tencent is excited to deepen its shareholding relationship with us, and that it looks forward to sharing ideas and experiences”.
Tencent’s purchase accounted for 12.1 per cent of total outstanding shares, or 10 per cent on a diluted basis that accounts for the conversion in the future of stock options and restricted stock units that are used for employee compensation. The group has been a long-time backer of Snap, having invested early on during venture capital fundraising rounds.
Snap shares plummeted late on Tuesday after the maker of the vanishing messaging app Snapchat disclosed both revenue and user growth that missed analyst expectations. Just before the release of the Tencent news on Wednesday, shares were off 18.7 per cent in pre-market trade in New York. They sharply rebounded after the release of the filing, trading down just 0.73 per cent at pixel time.
In response to the disappointing earnings report, Evan Spiegel, co-founder and chief executive, laid out a new product roadmap, including the redesign of the main Snapchat app that he promised would be “disruptive to our business in the short term”.