Momo Inc. operates a mobile-based social networking platform in the People's Republic of China. The company enables users to establish and expand social relationships based on location and interests. Its platform includes its mobile applications and various related features, functionalities, tools, and services that provide to users, customers, and platform partners. The company also offers mobile games that are designed with a various themes, cultural characteristics, and features to appeal to a range of segments of the game player community, as well as paid emoticons and mobile marketing services. As of September 30, 2014, it had 180.3 million users. The company was formerly known as Momo Technology Company Limited and changed its name to Momo Inc. in July 2014. Momo Inc. was founded in 2011 and is headquartered in Beijing, the People's Republic of China.
Alibaba-Backed Chinese Chat App Momo Surges in U.S. Debut http://finance.yahoo.com/news/alibaba-backed-chinese-chat-app-233910871.html
Momo Inc., a Chinese social media application backed by Alibaba Group Holding Ltd. (BABA), surged 26 percent on its first day of trading in New York after raising $216 million.
The shares jumped to $17.02 on Dec. 11 in New York after they were sold for $13.50, the middle of the price range. Concurrently to the initial public offering, Momo plans a private placement to shareholder Alibaba of $50 million and $10 million to classified advertising website 58.com Inc., its prospectus shows. The Bloomberg index of the most-traded Chinese stocks in the U.S. gained 0.5 percent, ending three days of declines.
The company, which generates most of its sales through membership subscription fees, had 60.2 million monthly active users at the end of September and is seeking to attract more of China's half-billion mobile Internet users. Momo's advance compares with an average 12 percent first-day gain for Chinese IPOs in the U.S. this year, data compiled by Bloomberg show.
"It has been very well received," Ella Ji, a New York-based analyst at Oppenheimer & Co., said in a telephone interview. "Alibaba as a pre-IPO investor and concurrent investor shows Alibaba's confidence in mobile-based, social products."
Alibaba took a 20 percent stake in Momo in November 2012 at an implied valuation of $100 million, according to a report by Brean Capital LLC in October. The company is planning an advertising partnership with the e-commerce company, according to its IPO filing.
NASDAQWed, Dec 31, 2014 4:00 PM EST
Other investors in Momo include Matrix Partners China, Yunfeng Capital and Sequoia Capital.
Internet-based messaging platforms are displacing traditional text services offered by wireless carriers. Facebook Inc. bought messaging startup WhatsApp Inc. in a $22 billion deal announced in February, days after Japan's Rakuten Inc. agreed to pay $900 million for rival Viber. Tencent Holdings Ltd.'s WeChat, one of China's most popular mobile-messaging applications, has 468 million monthly users worldwide, according to the company.
Alibaba may see an opportunity to expand Momo's scale, Ji said. "With the right target and strategy, there is more for Momo to do," she said. "It has this potential to develop to be a really location based, social app, not only for dating."
Momo's surge is the second-best debut among 14 Chinese companies that went public in the U.S. this year. Alibaba climbed 38 percent on its first day of trading Sept. 19. Momo posted $26.2 million in net revenue in the nine months through September. The social media company is unprofitable, its IPO filing shows.
It is worth noting that Alibaba Group Holding Ltd. (BABA) invested in Momo in 2012, taking a 20% stake in the company for $100 million, according to Brean Capital. According to the filing, Momo and Alibaba are planning a partnership with targeted ads for merchants on Alibaba. Momo plans a private placement with Alibaba of $50 million and $10 million to 58.com Inc.
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