Momo to raise up to $232m from US IPO

Momo Inc, a location-based social networking platform in China, said over the weekend that it plans to raise up to $232 million from a listing in NASDAQ.

The IPO price will be between $12.50 and $14.50 per American Depositary Share, Momo said in a filing to the Securities and Exchange Commission on Friday (US Time).

Momo, launched in August 2011, claimed it is the No.3 mobile social app in China with 180.3 million registered users as of September 30. In contrast to WeChat's friend-based social networking, Momo allows users to pinpoint and contact nearby strangers anonymously.

"Tencent's WeChat and QQ apps have a dominant position in the friend-based social networking market in China, so a stranger-based app is a wise strategy for latecomers," Luo Lan, an analyst for IT consultancy Analysys International, told the Global Times Sunday.

However, Momo's fast emergence has been accompanied by controversy over its functions, as some users treat the app as a useful tool for setting up blind dates or seeking one-night stands.

Momo said in the filing that a number of factors could negatively affect user retention, growth and engagement, such as being unable to combat spam and inappropriate or abusive use of its platform.

"Momo has never tagged itself as a hookup tool, but stranger-based social apps are very likely to face this problem," Luo said.

She noted that Momo aims to rebuild its reputation by cracking down on harmful information on its platform and focusing on developing functions that enable users to establish social relationships based on interests.

Momo said it began to generate revenues in 2013 from membership subscription fees, mobile games, paid emoticons and mobile marketing services, but the company has yet to post a profit. It reported a net loss of $22.9 million in the first nine months of 2014.

The filing also showed Momo plans to sell shares to Alibaba Group Holding worth $50 million and online classifieds firm 58.com Inc worth $10 million through the concurrent private placement.

Momo said it plans to monetize user traffic on its nearby people function through cooperating with Alibaba to place targeted marketing of merchants on Alibaba's marketplaces, and cooperate with 58.com by providing users easy access to their marketplaces.