On Aug. 6, President Donald Trump issued an executive order to ban the use of Tencent's (TCEHY -0.21%) WeChat, China's top messaging app, in the United States for national security reasons. The order, which takes effect after 45 days, claims WeChat "automatically captures vast swaths of information from its users," which could "allow the Chinese Communist Party access to Americans' personal and proprietary information."

It also calls WeChat a tool for "keeping tabs on Chinese citizens who may be enjoying the benefits of a free society for the first time in their lives" in the United States and other countries. Tencent's stock sank after the news, since it generates significant revenues from WeChat's platform.

But if investors take a closer look at the order, they'll probably realize the sell-off was an overreaction. Here are the four top reasons Tencent probably isn't too worried about Trump's actions against WeChat.

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Image source: Getty Images.

1. Less than 2% of its daily active users

WeChat served over 1.2 billion monthly active users (MAUs) last quarter. It doesn't disclose its daily active users (DAUs) each quarter, but it claimed to surpass a billion DAUs last year.

Tencent doesn't reveal how many of those users are located in the United States. However, Apptopia estimates WeChat has about 19 million DAUs in the U.S. -- and most of them are Chinese immigrants, international students, or professionals with contacts in China. That sounds significant, but it represents less than 2% of WeChat's total DAUs.

2. WeChat and Weixin are separate apps

WeChat is the version of the app for overseas users, and Weixin is the version for mainland Chinese users.

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Image source: Getty Images.

The two names are often used interchangeably, but WeChat and Weixin are actually two separate apps which run on different networks. Weixin stores its user data on Chinese servers, while WeChat stores its user data in servers in Canada and Hong Kong.

Users registered on Weixin's Chinese network, which has much tighter censorship restrictions, can't follow any official accounts created on WeChat's overseas network. However, WeChat users can freely follow any official accounts on Weixin.

Therefore, Tencent could claim WeChat and Weixin are separate apps -- even though the order broadly claims WeChat has "over one billion users" -- to insulate Weixin from the upcoming ban. It could also point out that WeChat's data is stored separately from Weixin's, so there's no reason to assume the Chinese government can access its overseas servers.

3. Weixin matters a lot more than WeChat

In China, Weixin is an all-in-one "super app" which allows users to make payments, buy goods, order food, hail rides, and access other services via over 2 million Mini Programs. It also plasters ads across an internal social network called Weixin Moments.

By comparison, WeChat serves up targeted ads, but it offers a much smaller selection of Mini Programs. Unlike Weixin, which allows both individuals and companies to create Mini Programs, WeChat only allows registered businesses onto the platform.

Therefore, Tencent likely generates significantly less revenue from WeChat than Weixin. The loss of WeChat's U.S. users might sting and tarnish its brand, but Trump's order won't impact its core audience of mainland Chinese users.

4. Targeting Tencent could wreak havoc on American companies.

The Trump administration could theoretically ramp up its efforts to contain Tencent and WeChat, but an escalation could hurt American companies.

For example, Apple (AAPL 0.28%) operates an App Store in mainland China, while the Android market is fragmented between smaller Chinese app stores. If the Trump administration forces Apple to drop WeChat from its Chinese App Store, iPhone sales in China -- which accounted for 16% of its top line last quarter -- would plummet.

But that's just the tip of the iceberg. Tencent could be forced to divest its stakes in major American companies, including Snap, Epic Games, Universal Music Group, and Activision Blizzard, while its wholly-owned American subsidiary Riot Games could face operational challenges with its flagship game, League of Legends.

Tencent Pictures, which produces movies like Wonder Woman and Top Gun: Maverick, could also be shut down. In other words, a full-blown war against Tencent could cause a lot of collateral damage for American companies and their employees, which are still reeling from the COVID-19 crisis.

So should Tencent investors be concerned?

Trump's move against WeChat is largely symbolic and only impacts a tiny percentage of its global users. Those users also likely generate less revenue than its domestic users.

For now, Tencent investors don't need to be too concerned. It still generates most of its revenue from China, so the main tactics which the Trump administration used against Huawei -- a trade blacklist and supply-chain disruptions -- would be largely ineffective against Tencent.

Tencent might cut off WeChat's U.S. users in just over a month. But other doomsday scenarios, like Apple dropping Weixin from its App Store or a declaration of war on all of Tencent's businesses, probably won't occur due to the damage it would cause American companies.