Tencent, the Chinese company behind the wildly popular social media app WeChat and a global player in mobile gaming, has bought an approximately 12% stake in Snap, the parent company behind the video messaging app Snapchat, financial filings showed Wednesday.
News of the $2-billion investment arrives at a troubling time for Snap. The Venice company released its third-consecutive quarter of lackluster financial results Tuesday and its shares have continued to slide further away from their $17 stock market debut in March.
But Tencent, one of China's three leading internet companies along with search engine Baidu and e-commerce giant Alibaba, sees something in the struggling company that could help reverse Wall Street's souring view.
"Any time a given investor -- whether a company or random billionaire -- makes a big investment it can help to convey that at least someone out there believes in the long-term potential for the company," said Brian Wieser, an analyst for Pivotal Research Group.
Snap shares dove nearly 20% Tuesday in after-hours trading after the company reported lower-than-expected revenue and user growth. They fell $2.21, or 14.6%, to $12.91 on Wednesday in the company's highest-volume day of trading since its initial public offering.
Tencent has been leading a wave of foreign investment by China's tech giants in recent years. The Shenzhen company bought a 5% stake in Tesla Inc. earlier this year and paid $8.6 billion last year to purchase Supercell, the Finnish developer behind the hit mobile game "Clash of Clans."
Alibaba, meanwhile, has already invested $200 million in Snap and poured millions more into ride-hailing app Lyft, virtual reality start-up Magic Leap and app search engine Quixey.
Baidu, which invested in Uber's now shuttered Chinese operations...