Is the Chinese Dating App Momo Eyeing A US IPO?

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Launched in August 2011, Chinese dating app Momo was one of the first location-based mobile apps in China. Like its American counterparts, the app allows members to upload personal information and photos, then locates the positions of other users in the area. And, again like its American counterparts,  Momo is plagued with a reputation for being a service for one night stands. Though Beijing Momo Technology Co. claims the app's purpose is to assist users in making friends and broadening their social networks, its salacious reputation just won't go away.

Despite being thought of as “a magical tool to get laid,” BMT is now working with banks including Morgan Stanley and Credit Suisse Group AG for the IPO in US, which Wall Street Journal reports is likely to happen later this year. According to WSJ, Momo was recently valued at around $1.2 billion in private fundraising. An earlier fundraising 1 1/2 years ago put Momo’s market value at just $500 million. The app seems to be on the right track, whatever reputation it has.

Earlier this year, the company reached a different milestone: more than 100 million registered accounts in Momo, with 40 million monthly active users. The challenge now is to monetize that user base effectively. One of its mobile games has over 1.4 million registered members, who now contribute as much as 12 million yuan (USD $1.9 million) to the company each month, but there's still work to be done.

An ongoing Chinese government crackdown on pornographic content online may affect Momo's IPO bid – it’s already happened once, to Sina Corp., whose stock prices were slashed after a government sanction. Allegations of pornographic use may seriously deter positive investments in the app. A recent investigative report published by Xinhua News showed that the app is being used for prostitution. The report also claimed that use of the dating app resulted in sexual assaults. And if that weren't already bad enough, cases of extortion have also been reported.

Whether or not the company can shed its reputation has yet to be seen, but it wouldn't be surprising if it gave investors second thoughts about backing the application. In an email to WSJ, a Momo spokesperson insisted the company supports the government’s crackdown on pornography and has plans to expand its team of internal censors. For now, the IPO's future is uncertain.