Market Overview

Tesla's Stock Gains After Tencent Stake

Tesla's Stock Gains After Tencent Stake

Shares of Tesla Inc (NASDAQ: TSLA) gained more than 2 percent early Tuesday morning after a regulatory filing showed that China-based Tencent Holdings now holds a 5 percent stake in the electric vehicle and energy storage company.

According to a 13G filing, Tencent purchased 8.167 million shares of Tesla's common stock through a combination of registered offering and open market purchases for a total aggregate purchase price of around $1.78 billion.

Who Is Tencent?

Tencent is a provider of internet value-added services with investments in Chinese and non-Chinese companies. For instance, the company developed an instant messaging software service called Tencent QQ, which boasts just shy of 900 million monthly active users, 60 percent of whom are people born after 1989.

Outside of China, Tencent held a 21.5 percent stake in American mobile game maker Glu Mobile Inc. (NASDAQ: GLUU) as of February 2016. While this investment proved to be a money losing one, Tencent is sitting on a major winner from its 2011 investment of Activision Blizzard, Inc. (NASDAQ: ATVI).

A 2016 Bloomberg report cited Jialong Shi, an analyst at Nomura, who said that Tencent's investment strategy is to acquire minority stakes, which better allows the management of teams to "run the company" instead of "trying to integrate them."

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Image Credit: By Andrew Herzman - Own work, CC BY-SA 3.0, via Wikimedia Commons

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