An Original: How Tencent could help Snapchat
Last week, Tencent acquired a 12% stake in Snap. The news came one day after Snap posted weak quarterly results that sent its shares plunging. On the other hand, earlier this week, Tencent became the first Chinese company valued at over $500 billion, its soaring market cap driven partly by better-than-expected results for the third quarter.
While Snapchat struggles with slowing user growth and monetization, we think Tencent – a gaming and social king – could help Snapchat in these four ways.
A Chart: How Tencent makes money
Tencent announced its earnings for the third quarter of 2017 last week. Games represented Tencent’s largest revenue source, accounting for 41% of total revenue this quarter.
Bike-sharing company Bluegogo collapses
The Chinese bike-sharing startup Bluegogo, is reportedly shutting down with wages unpaid and staff departing, leaving a $30 million debt outstanding. The company may also have difficulty returning millions of dollars in deposits to its millions of users.
Founded last November, Bluegogo has rolled out approximately 700,000 bicycles on Chinese streets. The company raised $68 million in Series A at a $140 million valuation this February.
Earlier this year, Bluegogo tried to enter San Francisco, but was met with badpress because it did not apply for city permits. It was ultimately forced to pull out due to complaints of bikes littered around.
“As a CEO, I’ve made mistakes,” wrote Bluegogo chief executive Li Gang in a public letter last Thursday. “I was filled with arrogance.” He admitted that the company’s troubles were partly due to a serious public relations incident in June.
Bluegogo’s collapse is the latest in a string of failures in China’s bubbly bike-sharing sector, which is dominated by three players: Mobike (backed by Tencent), Ofo (backed by Didi), and Hellobike (merged with Youon Bikes last month).
Alibaba acquires major stake in China’s largest hypermarket operator
Alibaba will invest $2.87 billion for a 36% stake in China’s top hypermart operator Sun Art Retail Group (HKSE, market cap $10B). Sun Art operates 466 Walmart-style hypermarts under the Auchan and RT-Mart banners across China.
Alibaba has been pursuing a “new retail” strategy, where the e-commerce giant seeks to transform offline retail using technology. It has invested close to $10 billion in brick-and-mortar stores since 2015. It has also opened 20 futuristic grocery stores across China called Hema. Read our piece on what the inside of a Hema supermarket looks like.
(GGV was an early investor in Alibaba in 2003.)
At Baidu’s World Conference in Beijing on Thursday, the company introduced “Raven,” a series of smart home devices which includes a speaker and two robots. The series represents Baidu’s first mass-market AI product and signals its ambitions in the highly competitive smart home market.
The Raven H, an AI-enabled smart speaker, will go on sale next month in China for RMB 1,699 ($256). The speaker is shaped like a colorful square tower with a removable topmost piece.
According to a recent survey by Penguin Intelligence, a Tencent research institute, the majority of news reading on mobile in China takes place in bed.