Chinese buy stake in struggling Facebook rival Snap
Chinese internet giant Tencent is increasing its stake in Snap, the loss-making operator of Snapchat.
Tencent has bought a block of shares and now holds a stake of twelve percent, the US company announced on Wednesday. The news apparently gave investors new hope. Snap shares narrowed their losses somewhat in over-the-counter trading after plunging around 20 percent on Tuesday evening following disappointing quarterly results. Messaging service Snapchat is suffering from fierce competition with the world's largest social network Facebook and is not growing as much as hoped.
The number of daily active Snapchat users increased by only five million to 178 million in the third quarter compared to the previous three months, less than experts expected.
Although sales grew by 62 percent to around $208 million within the year, the loss more than tripled to $443 million. But the loss more than tripled to 443 million dollars. Snapchat is used primarily by younger people who appreciate the fact that their messages are deleted again quickly.
The company makes money primarily from advertising and competes directly with Google and Facebook. According to media reports, Tencent had already acquired shares in Snap in private financing rounds in 2012 and 2013. (SDA)
