According to Apollo News, the share of Chinese Internet giant Tencent Holdings abruptly dropped after two of its largest shareholders announced to reduce their stake holdings in the company.
Within a minute in the afternoon of June 27, the market value instantly evaporated over 22 billion dollars.
In the morning, Tencent shares increased more than 4%. Unexpectedly, the shares reversed their course in the afternoon, falling from 51 dollars to 48,63 dollars.
The flash crash occurred following the disclosure of the shareholder holdings.
Nasper and Prosus, two major shareholders at Tencent, published a press release, announcing that they would begin a long-term, open-ended program to repurchase their shares.
To raise the funds required for the share repurchase program, they would sell the shares held in Tencent on the market.
According to the press release, they expect to sell a small percentage of the average daily trading volume of the company’s shares.
Last April, Prosus reduced its holding in Tencent by around 2%. At the time, Prosus stated that it would not sell additional shares for at least the next three years. Only one year passed, Prosus has already cut its ownership in Tencent again.
In addition, on the evening of June 26, Tencent has reportedly dealt with a large-scale hack.
According to an article in China Economic Weekly on June 27, there have been various reports that Tencent’s QQ instant messenger was hacked on that day.
Many users of Tencent’s messenger app took to social media to complain that hackers have accessed their accounts and sent pornographic images and gambling content to their contacts.
Some users expressed their concerns over Tencent’s security. A user retorted, [quote] “Don’t be dumb, that center is for stealing your information, not for preventing virus theft or anything like that.”