
Chinese internet giant Tencent Holdings[1] said on Thursday it could help Snapchat[2] owner Snap[3] publish video games and improve ad sales after acquiring a 12 percent stake[4] in the US social media network.
Snap's disclosure in a US regulatory filing that Tencent had recently bought 145.8 million of its shares on the open market set off a wave of speculation among investors about the relationship between the firms.
Shares in Snap closed at $12.91 on Wednesday, down 14.6 percent, as investors pummelled the company for slow user growth and treated Tencent's move as an investment rather than the precursor to an acquisition.
Tencent's shares do not have voting power and it will not have a board seat, but the two companies broadly believe in cooperation that goes beyond passive investing, according to Snap's filing on Wednesday. Tencent on Thursday described a potentially close relationship.
"The investment enables Tencent to explore cooperation opportunities with the company on mobile games publishing and newsfeed as well as to share its financial returns from the growth of its businesses and monetization in the future," it said in an emailed statement. It also referred to the potential for "newsfeed ads".
Games and a newsfeed have not been a part of Snapchat, although the company on Tuesday said it was planning a redesign.
Analysts say Tencent, the world's largest gaming company by revenue, has benefited from its social media apps for the phenomenal popularity of its smartphone games such as Honour of Kings, and will need the help of local social networks in promoting its games in overseas markets.
The Snapchat app, though, is banned in China, where non-Chinese social media networks are generally restricted,...