China’s Tencent Snaps Up 10 Percent Stake in Snapchat Parent

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China’s internet behemoth Tencent has acquired at least a 10 percent stake in Snapchat parent company Snap, the company disclosed in an SEC filing on Wednesday.

Tencent snapped up 145.78 million shares of non-voting common stock on the open market. “We have long been inspired by the creativity and entrepreneurial spirit of Tencent and we are grateful to continue our longstanding and productive relationship that began over four years ago,” Snap said in the filing.

The disclosure comes one day after Evan Spiegel’s social network reported hugely disappointing earnings for the third quarter in a row.

On Tuesday, Snap reported $207.9 million in revenue and a loss of 14 cents a share for the three months ended Sept. 30 —  falling short of analyst estimates of $237 million in revenue, but slightly beating earnings estimates of 15 cents a share.

Snap reported 178 million daily active users — less than the 180.5 million it projected. It added 4.5 million DAUs for the quarter, representing only a 3 percent increase over last quarter. And even as Snap continues to scale, their hosting costs continue to increase, jumping 11 percent per user quarter-over-quarter.

Snapchat now has 178 million DAUs — trailing the 300 million its chief rival, Instagram Stories, boasts. At the same time, the company failed to meet Wall Street’s expectations for sales. Snap pulled in $207.9 million in revenue, falling short of analyst estimates by nearly $30 million.

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