Tencent Holdings Ltd. has taken a 10 percent stake in social media software maker Snap Inc.<\/p>\n
In an SEC filing Wednesday, the Snapchat developer said Tencent bought 145.8 million non-voting shares in the company.<\/p>\n
Snap said Tuesday it\u2019s redesigning its mobile application to reach a broader audience and make more money from ads, as third-quarter financials showed sales growth keeps lagging investor expectation. Shares fell as much as 22 percent in extended trading after the announcement, and have dropped about 38 percent since the company\u2019s initial public offering in March.<\/p>\n
Snap\u2019s earnings were a dark spot in what\u2019s turned out to be an otherwise upbeat third quarter for tech. Results from companies such as Amazon.com Inc. and Apple Inc. have been met with a warm welcome by Wall Street in recent weeks.<\/p>\n
In an advertising market where Facebook Inc. and Alphabet Inc.\u2019s Google grab the majority of new spending, Snap needs to prove it can keep adding users as well as generate more revenue from each. That\u2019s a challenge as Snap\u2019s catchier features, beyond just letting people send photo and video messages that disappear after a short time, keep getting replicated by Facebook.<\/p>\n
While the Snapchat app remains the company\u2019s primary business, it has also ventured into hardware by making Spectacles — sunglasses with a built-in camera. Despite the buzz the glasses generated at launch, Snap had to take a $39.9 million writedown because it overestimated the value of its inventory.<\/p>\n
Snap had 178 million daily users on average in the third quarter. This includes features such as \u201cStories\u201d, which lets people share snapshots of their lives that disappear 24 hours after they\u2019re posted. Similar products for Instagram, also called \u201cStories,\u201d and for WhatsApp, called \u201cStatus,\u201d each have more than 300 million daily active users, Facebook, which owns both products, said last week.<\/p>\n