Tencent Drops a Further $22 Billion After Naspers Trims Stake

(Bloomberg) -- Tencent Holdings Ltd. has lost $48 billion of market value over two days, pummeled by a warning on margin pressure as well as a surprise sale of stock by its biggest shareholder.

Asia’s largest company slumped 4.4 percent in Hong Kong Friday, slicing $22 billion from its market value. The drop came after Naspers Ltd. revealed it raised HK$76.9 billion ($9.8 billion) selling a 2 percent stake at a 7.8 percent discount to Thursday’s close. The South African media company is cashing in a sliver of one of the greatest venture-capital investments ever -- a deal so large it ranks among the largest Hong Kong share sales of all time.

That deal emerged less than a day after Tencent signaled its willingness to sacrifice short-term margins by spending on content and technology to galvanize future growth. Investors also sold off Chinese stocks as a trade dispute with the U.S. escalated.

“This is more to improve Naspers’s own free cash flow and allow them higher flexibility in pursuing investment opportunities,” Jefferies analysts led by Karen Chan wrote Friday. “This has no negative implication for Tencent’s growth potential.”

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Naspers will use the money from the sale of Tencent shares to invest in its classifieds, online food delivery and fintech businesses and make other investments. A representative for Naspers couldn’t be reached for further comment.

Despite the sell-off, Tencent remains China’s largest company and one of the world’s most valuable. Trading volume surged to about $16 billion Friday as bearish bets on the company soared.

--With assistance from Loni Prinsloo

To contact the reporters on this story: Crystal Tse in Hong Kong at ctse44@bloomberg.net, Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan

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