[smaili]

> Tencent is a prolific investor. It holds equity in Snap, this year’s hot tech IPO, among others following an early investment. While that interest in messaging makes sense since Tencent’s operates China’s dominant chat app — WeChat — it isn’t immediately clear whether the Tesla investment has strategic undertones.

This was my immediate question as well. Is this purely an investment for its portfolio or is there a strategic element as well? I imagine being able to send/receive messags on WeChat as the beginning of something more.

[hkmurakami]

Their strategy is reminiscent of Softbank's.

There may be some synergystic stuff from time to time (ex: Yahoo! Japan), but most of the time it's a pure investment move to amp up their returns.

Berkshire plows the cash flow from their insurance business into acquiring businesses (though they get a controlling stake), Softbank plows its telecom cash flow into speculative VC bets, and Tencent seems to be plowing its own revenue into VC bets as well.

[creaghpatr]

Could be a portfolio diversification move- not sure how they financed it but China's currency is pretty inflated, we've seen a lot of large equity investments from the Chinese in the past 2 years (in Hollywood, for example).

If the CNY crashes for whatever reason they can dump the stock and flip the currency for a lot.

[ihsw2]

Having access to the internals at Tesla is interesting and potentially powerful -- significant ownership share brings many benefits that are by no means small. Albeit on a need-to-know basis and through a peephole, it is nonetheless advantageous.

It may cost $1.7B but it guarantees continued access, whereas throwing technical exfiltration (ie: hacking) and manual exfiltration (ie: mole in Tesla staff) whose resources are limited and unpredictable.

It's also a good financial investment.

[erikpukinskis]

Can you explain what kind of access you mean? I thought preferential information sharing with specific investors violated SEC rules?

[Lost_BiomedE]

This is my understanding as well. I get great info talking with smallcap to the just barely midcap companies if you ask the right questions. Heck, usually, I am able to get a conference with a VP or CEO if my questions go above paygrade. I am no whale.

In practice, you will not get the same level of info on larger companies if you are not institutional or in a group of retail investors holding a decent share-count. Information obtained is usually a small amount above what is found on the conference call or via google.

[ihsw2]

As mentioned by the other comment, board members get preferential information sharing. I would haphazard to guess that Tencent balked at the purchase price of a seat on the board of directors (eg: 20% stake or something to that effect) or Tesla opposed it on principle. Probably the latter and then Tencent moderated their stake offer.

However, shareholders are afforded access regular updates on the financials of the company, which Tencent may be satisfied with on its own.

[chillydawg]

not if they have board seats

[mtgx]

Yes, that's the real question. If Tencent obtained a board seat as well, then I could think of all sorts of scenarios that could benefit Tencent in China, but not necessarily Tesla.

[coderholic]

Is that true? I've never read the SEC rules or looked into this in detail but my understanding was that information sharing only becomes a problem if you actually trade on that information (ie. insider trading). I didn't know the rules actually tried to limit what was shared. How does that work with employees etc, who will almost certainly have access to a lot of preferential information and many also be investors or significant shareholders? Would love to know more!

[ww520]

Tencent Holdings is more of an investment/VC company. WeChat is just one of its subsidiaries it funded that became wildly successful. Its primary focus is still investment in technologies. Pretty sure it can find some synergy with Tesla among its wide reach of portfolio. Does it hold solar related companies?

[epynonymous]

tencent has 2 primary competitors in china, primarily alibaba and baidu. baidu's business model is to copy everything google (so google maps, youtube, self driving cars, etc), but these 3 companies are converging on a lot of these things as baidu gets into self driving cars, was an investor in uber, etc. i think because they have a huge amount of capital, that they can make these types of investments to prepare themselves to take on alibaba and baidu head on in the future.