China's investment holding giant Tencent is taking a 10% stake in Snap (SNAP, TCEHY)

pulse

November 8, 2017 11:48 AM

The news comes a day after the company's subpar earnings.

Tencent, a giant Chinese investment holding company, is taking a 10% investment in Snap.
The news comes a day after Snap's Q3 earnings, where the company reported disappointing numbers that missed Wall Street's expectations

Chinese investment giant Tencent has taken a 10% stake in Snap, the parent company of the popular social network Snapchat, by purchasing 145.8 million non-voting shares over the last quarter.

The news comes as a vote of confidence in the company, which yesterday reported Q3 earnings that failed to meet analysts' expectations and made the stock dive 17% in the after hours.

Over the last three months, Snapchat only added 4.5 million new users, a mere 3% increase over the previous quarter (the company announced it's going to redesign the app to make it more accessible).

Snap also had to write off about $39 million (£29 million) in unsold Spectacles, its camera-equipped glasses that let users take photos and videos without firing up the mobile app from a phone.

This isn't the first time the two companies have crossed roads.

Back in late 2012 and 2013, Tencent invested in Snapchat through a series of private rounds (CNBC, where we first saw the story, also reports), while an additional deal — where CEO Evan Spiegel and cofounder Bobby Murphy had apparently asked for $40 million (£30 million) in secondary shares — failed to materialise in late 2013.

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