Video games could be next for Snapchat, says Tencent

Chinese gaming and social media company Tencent Holdings Ltd flagged video games and ad sales as areas where it thinks it could help Snapchat owner Snap Inc after acquiring a 12 percent stake in the U.S. firm. Snap disclosed in a U.S. regulatory filing on Wednesday that Tencent recently bought 145.8 million of its shares on the open market, fueling investor speculation about how the two companies might work together.

The U.S. social media company has struggled since its March initial public offering to meet analyst expectations for user growth, and it is locked in fierce competition for users and ad dollars with Facebook Inc. In describing its stake, Tencent, the world’s largest gaming company by revenue, implied a close relationship with Snap that could go beyond passive investing and involve assisting the U.S. company with strategy.

Investors treated Tencent’s new stake as an investment rather than a step toward an acquisition, while analysts viewed the move as potentially more beneficial for the Chinese company than for Snap. Shares in Snap fell 4.3 percent on Thursday to $12.35, adding to a 14.6 percent loss in the previous session. Snap went public at $17 a share. Morgan Stanley analysts late on Wednesday cut …read more