Online Fashion Seller Mogu Makes Lackluster U.S. IPO

Fashion e-commerce specialist Mogu Inc. ended its New York debut at the same price as its initial public offering (IPO), after dipping as much as 15% during the day.

The Tencent-backed online retailer opened at $12 on the New York Stock Exchange Thursday after raising $67 million by offering 4.8 million American depositary shares at $14 — the low end of the range of $14 to $16. It closed at $14, giving it a market cap of around $1.3 billion.

That was less than half of its valuation of $3 billion in 2016, when the company was formed from the merger of two popular e-commerce sites — Meilishuo.com and Mushroom Street. The sites were founded in 2009 and 2011, respectively, at the height of China’s e-commerce boom.

Mogu offers fashion content and products to China’s young shoppers. Users access the related services on its Mogujie app, as well as through a “Mini Program” on WeChat — a type of stripped-down app that runs within the ubiquitous messenger app owned by Tencent Holdings Ltd.

For the year ended March, Mogu reported a gross merchandise volume — a figure that counts the revenue of total orders transacted online — of 14.7 billion yuan ($2.14 billion), a 24.6% increase year-on-year. Its net loss for the same period was 558.1 million yuan, down from 939.1 million yuan, according to its previous regulatory filing.

Mogu relies heavily on its largest shareholder Tencent to attract users, with sales on the latter’s Mini Programs accounting for around 30% of total sales, the filing showed.

Mogu’s two major websites — Mushroom Street and Meilishuo.com — both started out as lifestyle channels on social media that promoted products sold on Alibaba’s e-commerce platforms. But it fell afoul with the e-commerce behemoth after a dispute in 2013, and later turned to Tencent.

Mogu’s IPO followed another Tencent-backed e-commerce site, Pinduoduo Inc., which made a strong debut on the Nasdaq in July.

Morgan Stanley, Credit Suisse Group AG and China Renaissance Holdings Ltd. were the main underwriters of Mogu’s offering.

Contact reporter Mo Yelin (yelinmo@caixin.com)