The Chinese internet giant Tencent has taken a 10pc stake in Snapchat’s parent company Snap, a welcome vote of confidence after the messaging app’s disastrous results this week.
The $2bn (£1.5bn) stake makes Tencent one of Snap’s biggest shareholders and gives it a valuable ally against Facebook, which has attempted to crush Snapchat by poaching many of the app’s best features.
However, the disclosure failed to arrest a precipitous slide in Snap’s shares on Wednesday. They fell by 16pc as Wall Street reacted to Tuesday night’s third quarter results, which revealed a sharp slowdown in user growth, continuing losses, and a $40m writedown on Spectacles, the camera-equipped sunglasses that it put on sale last year.
Tencent owns WeChat, the dominant messaging app in China, as well as a majority stake in Supercell, the Swedish mobile gaming company behind Clash of Clans. Most Western internet firms are banned by China’s online censors, despite many efforts to woo Beijing.
Tencent was an early investor in Snap but has recently increased its stake, a regulatory filing revealed on Wednesday.