Snap's shares tumbled after it disappointed with revenue and user growth. But the stock recovered slightly after Snap said China's Tencent holds 12 pct stake. Roselle Chen reports.
Snapchat owner's shares plunged after the company reported third-quarter revenue and user growth well below expectations. But the stock recovered slightly when Snap said China's Tencent holds 12 percent stake. The news came as U.S. and Chinese firms announced $9 billion in new deals on the arrival of President Donald Trump in Beijing. Morningstar analyst Ali Mogharabi told Reuters: "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." Tencent is the largest social media and gaming company in China. It owns a popular mobile application WeChat. Along with Alibaba and Baidu, Tencent has poured billions of cash into U.S. firms. It holds five percent of Tesla, as well as stakes in ride service company Lyft, and augmented reality startup Magic Leap. As for Snap, it's struggling to compete with Facebook's Instagram. To change that, it's redesigning its disappearing-message app Snapchat to make it more user-friendly. In the past, Snap's co-founder and chief executive Evan Spiegel referred to Tencent as a "role model."