INTERNET: Momo, Today’s Headlines Shine On Top Apps List
Bottom line: A new list of China’s top apps spotlights fast-growing names like news app Today’s Headlines, photo app Meitu and dictionary app Youdao, which could raise hundreds of millions of dollars in new funds this year.
A newly released list of China’s top 10 apps for 2014 is shining a spotlight on an up-and-coming field of lesser known names that could be companies to watch, as many are much younger than stalwarts like Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700). The “BAT” trio of China’s biggest Internet firms took 4 of the top 10 spots on the list, which was compiled by Baidu. But far more interesting were some of the other names, including recently listed social networking app Momo (Nasdaq: MOMO) and news app Today’s Headlines, which made its own headlines with its meteoric rise last year.
Perhaps it’s not surprising that Baidu, as compiler of the list, was the only company that took more than 1 of the top 10 spots, winning places for its mobile search app and also for its mapping app. (Chinese article) Tencent was predictably on the list for its wildly popular WeChat mobile messaging app, while Alibaba made the list for the mobile app for its popular Taobao C2C marketplace. The other company whose presence on the list came as no surprise was the Twitter-like Sina Weibo (Nasdaq: WB).
Then there was Momo, which was founded just 4 years ago and has carved out a place for itself on the mobile Internet by focusing on an app that relies on location-based (LBS) technology to help connect users with other users nearby. The company zoomed into the headlines late last year when it held an IPO on the Nasdaq, which did reasonably well despite the company’s young age.
The offering was tainted by accusations that the company’s founder had stolen technology from his former employer NetEase (Nasdaq: NTES), which made the allegations on the eve of the IPO. (previous post) That mini scandal has tainted Momo’s name slightly, and the company’s shares are now trading nearly 20 percent below their IPO price now that the hype surrounding the offer has faded.
Today’s Headlines also burst into the headlines last year when it raised an impressive $100 million in funding less than 2 years after its founding. But then the company also got into its own scandal when several Internet and traditional media companies including Sohu (Nasdaq: SOHU) accused it of illegally copying their news. (previous post) Presumably that clash has been settled by now, and 2015 could well be the year this innovative app consolidates as China’s premier news-finding service.
Apart from Momo and Today’s Headlines, others on the list included a photo management app called Meitu, a dictionary app called Youdao and a gourmet food and dining app called Douguo. It’s somewhat surprising that a rival app from leading restaurant recommendation site Dianping wasn’t in the top 10, but we don’t really know how Baidu compiled its list.
This list of companies is interesting as much for what it says about what’s popular for Chinese mobile web surfers as it does for the individual companies. News is one of the main things that people read on the Internet, and an app that can help people easily find their favorite headlines is an obvious choice to do well. Eating and socializing are also both popular, which explains Momo, Meitu and even Douguo’s presence on the list. Youdao’s presence was a slight surprise, and reflects a Chinese fascination was words and also with translation, since Youdao provides both.
In terms of what to expect from these companies financially, I would expect to see all of these less-known, unlisted names attract strong interest from investors in 2015. We could see 2 or 3 raise more than $100 million each in the months ahead. I doubt we’ll see any of the newcomers go public this year, though it’s possible one could make an attempt if market sentiment remains strong.
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