Update | China dating app Momo goes ahead with Nasdaq IPO as accusations against its founder backfires on former employer
Allegations of misconduct against a former employee just 40 hours before his new venture was due to list on the Nasdaq have created a media backlash against NetEase.
Allegations of misconduct against a former employee just 40 hours before his new venture was due to list on the Nasdaq have created a media backlash against NetEase - China's fifth-largest internet firm by market value.
It also alleged Tang had abused his power to award contracts worth more than one million yuan (HK$1.26 million) to a company co-founded by his wife.
Momo said Tang would "vigorously defend himself" against the allegations, but declined further comment citing a "silent period" mandated by US laws.
Momo's IPO went ahead as planned on Thursday on Nasdaq, raising US$ 216 million with an offer price of US$13.50 per share. The stock rose 26 per cent during the trading day, ending at US$17.02, giving Momo a market capitalisation of US$3.17 billion.
Meanwhile, a media storm is gathering pace with former colleagues and commentators defending Tang and criticising NetEase for launching what they say is a well-timed smear campaign.
Two former colleagues of Tang at NetEase have released statements defending him against what they call fabricated allegations by a jealous and vindictive ex-employer.
Li Yong, former president of NetEase's news portal division and Tang's ex-supervisor, said he had allowed Tang to devote off-work time to his business. Zeng Li, the former director of NetEase's video division, said several internal audits found nothing untoward in the contracts given to Tang's wife's company.
While some online users have questioned Tang's ethical standards in light of the accusations, many more say the timing suggests it's an attempt by NetEase to wreck Momo's initial public offering.
The accusations are unlikely to have a major impact on Momo's IPO or stock price after the listing, said Wei Wuhui, an industry commentator and lecturer at Shanghai Jiaotong University.
"As long as Tang is not found guilty in potential lawsuits in the future, they won't hurt Momo much," he said.
Backed by both e-commerce powerhouse Alibaba and classified ads website 58.com, Momo has attracted 60 million active users by offering location-based chatting and meeting services via its popular mobile app.
