- Chinese dating app maker rallies most since 2014 IPO
- Momo ADRs have more than doubled from record low in February
Alibaba Group Holding Ltd.’s finance affiliates have joined the group seeking to buy out Momo Inc., sparking a record rally in the Chinese dating app maker’s stock.
Momo surged 34 percent to $16.09 in New York on Wednesday, the biggest gain since its December 2014 initial public offering in the U.S. Trading volume of 15 million shares was more than 10 times the full-day average of the past three months.
The American depositary receipts rallied after a regulatory filing showed that Alibaba affiliates are backing a buyout of Momo that Chairman and Chief Executive Yan Tang proposed last June, just six months after raising $248 million in the IPO. The ADRs had slumped to a record low on February 12 as speculation mounted that the deal wouldn’t go through. Later that month Momo named Alibaba’s co-founder Joseph Tsai to its board as a director.
“Today’s announcement renewed hopes of Momo’s privatization,” Henry Guo, a San Francisco-based analyst at Investment Technology Group, said by phone. “With Alibaba on board it shows that money is no longer a problem.”
Investors are also speculating that Weibo Corp. may become a buyout target for Alibaba after Momo, according to 86Research Ltd. The shares of China’s Twitter-like social-media service advanced 13 percent to $20.32, the highest since Dec. 23.
“It is possible that Alibaba will acquire Weibo because the company will fit into its media strategy,” Juan Lin, Shanghai-based analyst at 86Research, who covers U.S.-listed Chinese stocks, said by e-mail.
Alibaba’s U.S. spokesman Bob Christie declined to comment on questions about the company’s acquisition strategy.
Only seven of 40 U.S.-traded Chinese companies that have proposed delistings from American exchanges in the past 12 months have completed the process, according to data compiled by Bloomberg, as a volatile mainland stock market and the economic slowdown in China have reduced the attractiveness of a local listing.