{ "docId": "019dd923-622c-750b-8b98-72ad4dd9da96", "docSlug": "86dfa89096f8", "documentTitle": "Momo, Inc. (MOMO)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2018-06-27 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 11, "pageCount": 70, "prevPage": 10, "nextPage": 12, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 4, "notes": "The slide uses red flag icons to denote specific areas of concern.", "elementsJson": [ "headline_text", "bullet_list", "callout_box" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-72ad4dd9da96/11", "deckHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96#slide-11", "components": [ { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.0018 }, "kind": "callout", "text": "Spruce Point Has Also Determined Another Undisclosed VIE Has Invested In, And Possibly Operated, An Illegal Onshore Gambling Site That Was Shutdown Earlier This Year", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "59603420-e201-4a86-9936-930c8a9acef2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.5 }, "kind": "callout", "text": "Acquisition of Tantan Doesn't Appear To Make Much Sense From A Strategic Or Valuation Perspective. The Insertion of Several Limited Partnerships Into The Ownership of Tantan VIE Shortly Before Deal Execution Also Seems Unusual. Spruce Point Believes That It Has Uncovered Pre-IPO Transactions That Would Suggest Management May Have A History Of Enriching Insiders", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8dede6c3-bb63-47b6-9b6e-bd9172816bc4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.9, "x": 0.05, "y": 0.25 }, "kind": "list", "text": "Spruce Point research suggests Momo has invested via an undisclosed VIE, and was possibly operating, a very popular and highly rated illegal gambling operation (Pokermaster 德扑圈) in China. It was exposed by CCTV in February 2018 and has now been shut down. It just so happens that Momo CEO, Tang Yan, is a well known poker player and gambler. We expect this discovery to garner significant interest from the Chinese government. Momo has not disclosed the revenue and/or earnings contribution to investors from Pokermaster and we haven't been able to determine the full impact. This raises concerns that management is using shareholder funds for self-interested purposes, and could be enhancing recent financial results with these activities.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3575a090-e82f-4fab-9616-73784188d29f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.3, "w": 0.9, "x": 0.05, "y": 0.65 }, "kind": "list", "text": "Spruce Point believes Momo overpaid when it purchased Tantan in Feb 2018 for $735 million ($600.9 million in cash and 5.3 million A class ordinary shares). The Tantan Series D financing in June 2017 valued it at $320 million and it is expected to do $4.5 million in revenue for the month of June 18. One theory is that Momo needed to use the cash it could not get out of China. In early 2012, Matrix and Purple Sky became the first two outside investors (~10% each) in Momo via the Momo VIE. Both companies would later enter into a series of transactions with Momo and other investors that mysteriously indicate that both parties independently owned the entirety of Series A-1 shares, something that we are unable to resolve.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4dbf504f-5ab3-4e20-8111-3d10a82f9bd1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.28, "y": 0.03 }, "kind": "title", "text": "Spruce Point Has Significant Concerns Regarding Multiple Red Flags Identified At Momo (Cont'd)", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "794797c3-1cc0-4706-991c-4676740a6cac", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "e278498a-096a-4353-8fba-54468fb867ff", "evidence": "The slide explicitly identifies 'red flags' and 'undisclosed VIEs' to suggest potential financial misconduct.", "confidence": 0.9 } ], "arcBeats": [ { "to": 69, "from": 7, "beatId": "2ed90acb-05ba-4602-8daa-c17fe790841b", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "Slides 7-69 systematically expose contradictions and red flags in Momo's business, including undisclosed charges, complex VIE structure, and regulatory risks.", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 15, "from": 7, "name": "Aha Moment", "slug": "03-aha-moment", "bestFor": "Data-heavy sections, research findings, analytical arguments", "matchId": "e80fc9fe-eee3-4c63-9ecb-b5238ed599c0", "evidence": "Slides 7-15 reveal several red flags and concerns, creating an 'aha' moment for the audience.", "position": 0, "objective": "What are the key concerns with Momo's business?", "structure": "The Problem/Question -> What the Data Shows -> The Insight", "confidence": 0.8, "description": "Establish a tension, present data, then deliver the insight that changes everything" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }