Tencent, Asia’s second highest valued tech firm, has bought a five percent share in Tesla. According to a filing, the Chinese firm scooped up 8,167,544 shares for around $1.7 billion to become one of Tesla’s largest shareholders.
Tencent are the master minds behind China’s largest social media platform ‘WeChat’ with over 850 million registered users. Additionaly, the reputable QQ; a large messenger, email & entertainment platform is also part of the Tencent Group,
The news sent Tesla’s share price up three percent in pre-market trading. The purchase was arranged on March 17 with the Tencent-owned shares now worth around $2.2 billion at current market value.
This development underscores the innovation we are witnessing in the Chinese digital industries with such large-scale investment into forward thinking, cutting edge research firms such as Tesla laying the groundwork for their expansion into the Middle Kingdom. It also hints at the potential for Tesla’s further collaboration with Tencent in China.
Tencent is a prolific investor. It holds equity in Snap, this year’s hot tech IPO, among others following an early investment. This interest in messaging makes sense with Tencent operating China’s dominant chat app — WeChat.
There will likely be strategic undertones to the Tesla investment with a partnership with Tencent significantly boosting Tesla’s efforts in China, which accounted for 15 percent of its $7 billion revenue last year.
Related investments in Tencent’s portfolio include electric car maker Nio, which just raised $600 million and Didi Chuxing, China’s largest taxi on-demand service, which is in the process of buying Uber China. Didi Chuxing is now integrated into WeChat providing Didi with huge levels of exposure to the app’s highly engaged and active user base. Recent research by Gentlemen Marketing indicated the average time spent browsing WeChat per day is 1.5 hours.
Such a high level of engagement has led to a wealth of highly focused, in-depth data on users activities on the application. It also functions as a browser with sites opened within WeChat itself. Tencent are building arguably the largest database of online user activity in the world. Big data such as this companies like Tesla will be interested to access as part of their AI research on mass behavioural trends.
Tencent disclosed their own investments into artificial intelligence research with the firm taking a senior machine learning researcher from their rivals Baidu to staff their China AI research lab. Their own investigation efforts into AI marry with Tesla’s cutting edge research in this field and strengthen the legitimacy of Tencent as China’s leading digital player in technological innovation.
Tencent just had a record year of revenue growth after it reported total sales of $21.9 billion for 2016. That figure was up 48 percent, representing the company’s highest revenue jump since 2012. Net profit for the year increased by 43 percent to reach $5.9 billion. This soaring growth far exceeds expectations, particularly amidst the slowdown of the Chinese economy & the instability of the RMB. Tencent are bucking the trend to drive growth in China’s fast expanding and ingenius digital sector.
WeChat, their flagship project, is at an all-time high with over 850 million registered accounts. They have arguably built the most innovative, integrated social network in the world with e-payment services, social e-commerce stores and a host of social tools effectively combining the value propositions of; Instagram, Whatsapp, Facebook & Twitter.
Such high profile investments are indicative of the game changing digital industry in China that is no longer a ‘copy cat’ market but rather a unique hub of innovation & creativity. Alibaba, Tencent & Baidu are the three main corporations to have evolved to cater for the Chinese end user, in many ways they are now outrunning their western counterparts as China makes it’s next huge leap towards a tertiary, service orientated economy.
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