Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

Nisha Gopalan is a Bloomberg Gadfly columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.

The great thing about Chinese companies' delist-relist strategy is that they can make a bucket of money for select shareholders without having to worry too much about the annoying reality of running a business.

Unfortunately, when it all goes pear-shaped, executives have to focus on pedestrian issues like growing users, boosting revenue and controlling costs.

Momo, a Chinese Tinder-like dating app, is a case in point. The Beijing-based company made its Nasdaq debut in December 2014. Its shares jumped 26.1 percent on their first trading day and since have underperformed their peers in the U.S.

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After a 26 percent pop on their opening day, Momo shares have underperformed their publicly traded compatriots
Source: Bloomberg

It took just six months for co-founder and CEO Tang Yan to change his mind about being a U.S.-listed firm and team up with the likes of Sequoia Capital China to make a buyout bid.

Tang and friends offered to take Momo private for $18.90 per ADR on June 23, 2015 -- near the height of the China markets boom, when relisting back home seemed like an easy money spinner.

A few weeks later, on Aug. 19, Momo reported second-quarter net income of $1.7 million, down from $6.7 million the quarter prior and driven mainly by interest earnings.

So here you have a CEO who convinced investors to buy into his company, took that money and almost pretty much straight away began talks to delist while seemingly not doing a lot to boost financial performance in the interim.

Fortunately, though, investors weren't persuaded any deal would go ahead anyway. Momo's stock dropped as much as 60 percent from its May 2015 peak as shares from Shanghai to Shenzhen tumbled and fears China would start to crack down on domestic IPOs took hold.

Momo isn't alone. China Information Technology, also listed on Nasdaq, is trading at 97 cents versus its June 2015 take-private offer of $4.43.

Those who do persist in following their delist-relist dreams face a long road. There's a queue of about 800 companies waiting to IPO in China, and of the some 48 U.S. buyouts announced since the start of last year, just seven have been completed.

Momo's decision Thursday to withdraw its go-private offer looks fortuitous because at the very least Tang and his team seem to have knuckled down. Earlier this week Momo released results that showed second-quarter net income is now $15.4 million, and crucially, that was driven by operating profit, not interest income.

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After focusing on revenue growth and improving operations, dating-app provider Momo managed to deliver a solid result to shareholders
Source: Bloomberg

In that, there's a lesson for all the delisting failures: Focus on business rather than stock-juggling shenanigans and you might build a sustainable and profitable company.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the authors of this story:
Tim Culpan in Taipei at
Nisha Gopalan in Hong Kong at

To contact the editor responsible for this story:
Katrina Nicholas at