The Chinese company Tencent (HKG:0700) has purchased a 12 percent stake in Snapchat’s parent company, Snap (NYSE:SNAP).
Tencent, one of China’s biggest tech firms, invested over $2 billion in Snap, building a position of 145.78 million non-voting shares in the past few months.
The news comes as Snap reported disappointing third-quarter results on Tuesday. Shares in the firm slid by almost 20 percent. Shares in Tencent remained flat following the reported news, remaining at $15.12.
“One thing that we have heard over the years is that Snapchat is difficult to understand or hard to use, and our team has been working on responding to this feedback. As a result, we are currently redesigning our application to make it easier to use,” said the chief executive of Snap in a statement on Tuesday.
“Tencent is excited to deepen its shareholding relationship with us, and that it looks forward to sharing ideas and experiences,” said Snap on Tuesday.
Tencent is one of the world’s biggest maker of video games. The Chinese firm generated $4.3 billion from games in the second quarter of this year. Earlier this year, Tencent bought a stake in US car maker Tesla.
Tencent’s stake and commitment to Snap comes as the chief executive faces pressure following the sliding share price and disappointing growth.
Snap made clear in the filing that, unlike many other U.S. stock market-listed corporations, the largely private firm is not obligated to disclose changes in Tencent’s ownership of firm’s Class A stock.
Chief executive Evan Spiegel said in a statement that Snap is planning to redesign the app to make it easier to use as the app could be “difficult to understand or hard to use” for many people. The firm is hoping to expand the app’s popularity beyond millennials to older generations.