Korean social networking platform company Momo Inc. (MOMO) is now trading following the completion of the I.P.O. But the lack of information for MOMO is yet another example of an unacceptable practice with publicly traded securities.
This isn't about MOMO specifically and it's not a criticism of the company. Although having said that, MOMO and other I.P.O.'s could make an effort to disseminate information about themselves. It's not just to satisfy securities laws, but do it for their own benefit. It's called promotion for the purpose of boosting the share price.
Let's work through this looking at why digging around for information on I.P.O.'s is too much of the wrong kind of effort.
- There are no press releases from the company except for the Dec 11th release Momo Announces Pricing of Initial Public Offering.
- Reuters.com has no information in the financials section of their website. Reuters is useful for their table format of earnings and revenues on a quarterly basis for the last 2.5 years on average. You could argue that Reuters is dropping the ball, but what's their incentive to do it on the day the stock starts trading?
- Finding the company's website is an exercise in frustration. There are too many publicly traded companies that don't even have a website. Really? We're supposed to consider investing in a big shot company that doesn't even have a website?
Edgar is the source for all public document filings for publicly listed companies listed on a U.S. exchange. Searching through the table of contents in Form F-1 leads to pg. 58 for financial information. It says the company isn't profitable, yet, and 2013 was the first year of revenues according to the ADS filing. But here's something else.
Further review of the lengthy document shows screenshots from the company's alleged platform. The content, i.e. the text in those screenshots, is in Korean with no translaton. Now we have foreign companies providing documents intended to provide transparency and disclosure and it's not in the native language of where the stock trades.
Why You Wait
Of course there are people who know about this company. Most of them are investment industry participants who are attempting to line their pockets by selling the I.P.O. The others are institutional investors who took the stories fed to them and documents provided by MOMO. Those investors are doing well on day one as the stock is well above the $13.50/share I.P.O. price. It's still early however and we know the first day can be something entirely different from what follows!
Retail investors will have to wait to get basic information, but maybe waiting will turn out to be advantageous.
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