Shares of dating app Momo rose more than 10% in
their market debut on the Nasdaq Thursday. This is the first Chinese tech
initial public offering in the U.S. since Alibaba's blockbuster stock sale in
September. Momo has more than 180 million registered users and it's catering to
the most populous nation on the planet. The site already grew 160% from a year
On top of that, Momo has some very good pals. Alibaba is
a big investor. Jack Ma's company owns a 20% stake and plan to buy more shares
as part of the IPO. 58.com a company often referred to as China's
Craigslist, is also purchasing a stake. Momo raised $216 million from the stock
Red flags: But Momo is still in the early stages of
trying to figure out how to make money from them. The company only started to
post revenue last year by selling membership subscriptions. Momo has 2.3
million paying customers so far. And the company is still not profitable.
What's more, only a small percentage of the people signed up
for the app actually use it regularly. Momo said that it has only 60.2 million
monthly active users and 25.5 million average daily users.
It's also not clear if an app like Momo can thrive on its
own. Tinder, the wildly popular dating app in the United States that lets
people swipe through a series of pictures to find someone they want to contact,
is majority owned by Barry Diller's online media conglomerate IAC.
Bitter divorce: Chinese online gaming company Netease issued
a statement Wednesday accusing Momo chairman and CEO Yan Tang, who had worked
for Netease prior to starting Momo, of unethical conduct. Netease claims that
Tang co-founded Momo while still working for Netease and that violated his
There have also been multiple reports in Chinese media
outlets about how Momo is being used by prostitutes to find clients. At a bare
minimum, it sounds like Momo has a reputation as something to be used for
casual romantic entanglements as opposed to finding true love.
Still, investors brushed those concerns aside Thursday. With
the backing of Alibaba's Jack Ma, it shouldn't be a huge surprise. But Momo
needs to find a way to boost its revenue and actually earn a profit one day if
it wants to live up to its name and become a true momentum (or momo) darling on
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