Naspers (DStv) through Tencent acquires stake in Snap Inc, the Snapchat parent

Leonard Sengere Avatar
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We are all aware of DStv which is under the Naspers group. Naspers is a South African multinational company which owns various brands; Multichoice, SuperSport and MWEB to name a few.

That is impressive but not as impressive as the fact that they own one third of Tencent. Now Tencent is a massive Chinese company responsible for We Chat and QQ. Just because we don’t use those messaging apps does not mean they are not huge. Both We Chat and QQ have almost a billion users, each.

That purchase of 33% stake in Tencent by Napsers way back in 2001 is probably the best decision ever made by the directors over at the company. They purchased that 33% stake for $32 million and that stake is now valued at over $130 BILLION. From $32 million to $130 billion in 16 years. What an investment.

Now Tencent has only gone on and bought a 12% stake in Snap Inc. Which makes Naspers’ about 4% indirect owners of Snap. That’s 4% of a company with a market capitalisation of almost $15 billion.

If you recall Snap Inc filed for an IPO back in March this year. Problem is since that time their performance has not satisfied investors and share price has been falling since the IPO. Tencent saw this depressed share price and decided to swoop in.

News of Tencent’s purchase of Snap shares broke soon after Snap’s third quarter results had been released. Share price had fallen by 22% when the results were announced but when the Tencent news broke the share price initially jumped by 34%.

Only time will tell if that investment is a wise one like the Naspers one was. Snap is currently struggling to compete as they are not drawing in as much advertising revenue as analysts expect them to be. There is also the small matter of competing against Facebook, which shamelessly copies all their unique features and Google, the kings of online advertising.