Shares of Kuaishou-W (ASX: 01024) tumbled more than 10% in trading, hitting an intraday low of HK$41.3. At the time of writing, the trading volume had reached HK$15.8 billion.

The decline followed a company announcement. Kuaishou-W stated it had been notified that TENCENT (ASX: 00700) sold a total of approximately 272.95 million of the company's Class B shares via an off-market block trade on July 6, 2026, to several independent third-party buyers. Following this transaction, TENCENT's stake in Kuaishou-W will decrease from about 15.68% to 9.37%, and it will no longer be a major shareholder. TENCENT indicated it remains confident in the long-term prospects of Kuaishou-W and that both parties will continue their mutually beneficial strategic partnership. Kuaishou-W expects the sale will not have any material adverse impact on its operations.

Analyst Commentary on the Move

A report from Citi noted that while TENCENT had previously suggested it might use its investment portfolio to fund shareholder returns, this specific divestment was still a surprise. This was particularly so given Kuaishou-W's relatively low valuation and the recent completion of a private funding round for its "Kling" AI model, in which TENCENT invested about $200 million for a 1.12% stake. Citi suggested this could signal TENCENT is reallocating capital from older investments towards new AI ventures to diversify its holdings and strengthen its position in artificial intelligence.

Potential Market Impact and Outlook

The bank warned that this stake reduction could negatively impact market sentiment towards Kuaishou-W and raise concerns about whether TENCENT might sell further shares in Kuaishou-W or other portfolio companies. However, Citi maintained a positive view on Kuaishou-W, citing its unchanged fundamental business and the growth potential of "Kling." The firm reiterated its "Buy" rating on Kuaishou-W with a target price of HK$72.