Momo Inc. (NASDAQ:MOMO) successfully IPOed, raising about $216 million (16 million ADS for $13.50 each). The IPO was backed by Morgan Stanley, Credit Suisse, JPMorgan and China Renaissance. Additionally, upon the successful completion of the IPO, Alibaba (NYSE:BABA) and 58.com (NYSE:WUBA) took stakes in the company - Alibaba bought $50 million worth of shares, 58.com bought $10 million. After the IPO, Alibaba and 58.com held stakes of about 6% and 1%, respectively (Alibaba was an active pre-IPO investor in the company).
Based on pre-IPO materials, Momo will cooperate with Alibaba to display merchant ads in the Momo app (i.e. showing ads in the Nearby People function). 58.com services were already available in the app when checked in early December. Terms of the revenue split for the deals with Alibaba and 58.com weren't disclosed; however, the company may offer investors more clarity in the future.
In its first day of trade, the IPO did well, rising about 26% after opening shortly before lunch. Demand for shares was strong, with the stock closing the day near session highs.
The performance may be even more noteworthy when considering some scandalous headlines published in the days leading up to the IPO. NetEase (NASDAQ:NTES), the former employer of Momo founder Yan Tang, accused Mr. Tang of violating the terms of his employment contract while he was with the company. The accusation noted that when Tang established Beijing Momo in July 2011 and later launched the app in August 2011, he was still a NetEase employee (technically a NetEase affiliated company). The accusation may have some merit (Momo filings indicate that Tang was an employee until September 2011, which would be after the Momo App was launched); however, it remains to be seen if any real action will follow.