Finance: Chinese tech giant Tencent is making a killing on its Snap investment

The Chinese investment firm is the largest stakeholder in Snap.

• Chinese tech giant Tencent is Snap's largest shareholder, owning 17%.
• The firm has likely seen a hefty gain thanks to Snap's stock, which on Wednesday climbed above its initial public offering price for the first time since July.
• You can track Snap's stock price in real-time here>>

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Tencent’s bet on Snap seems to be working out.

The Chinese tech giant, which has a market cap of more than $518 billion, snapped up 146 million shares of Snap in November, public filings show. The prices at which Tencent made its purchases are unclear, but Snap shares have surged 25% since then, thanks to the social-media company’s recent earnings beat.

When Tencent's investment was announced, shares were trading at roughly $13. With Snap's 45% rise this week following a blockbuster earnings that investment is now worth more than $2 billion.

Combined with its $2 billion pre-IPO investments in Snap, Tencent is currently the largest shareholder, with a 17.5% stake, according to Bloomberg data. That could make for a hefty profit if the firm decides to exit its Snap investment anytime soon.

Snap CEO Evan Spiegel is also seeing green this week. The 27-year-old founder owns just over 10% of the company, and has seen his net worth swell to $4.3 billion, up about $1.3 billion following the report.

Tencent might be bullish, but Wall Street remains skeptical of Snap’s future.

Analysts polled by Bloomberg have an average price target of $15.82 for the stock — 20% below where shares were trading Thursday afternoon.

“Snap reported good 4Q17 results vs. expectations, with revenues above forecasts,” Pivotal analyst Brian Weiser said in a note. “However, we did not hear any commentary nor observe any data which causes us to meaningfully alter longer-term variables in our model. Our price target remains $10 per share on a YE2018 basis, which continues to lead us to rate the stock Sell."

Jeffries analyst Brent Thill echoed Weiser’s concerns: “A good quarter doesn't change our fundamental view that Snap has its work cut out to continue to deserve a premium multiple,” he said.

The Chinese investment firm is the largest stakeholder in Snap. Read Full Story