Updates with details of Alibaba's latest holdings, and statement from Alibaba.

Bottom line: Alibaba's sale of Momo shares is probably part of a slow-motion divorce, as Momo's founder aims to continue forward as a standalone listed company following the termination of its buyout bid earlier this year.

The story of the failed courtship between leading e-commerce company Alibaba (NYSE: BABA) and social networking app operator Momo (Nasdaq: MOMO) could be nearing  an end, with word that the former has sold off some of its stake in the latter. This particular tale is full of twists and turns, culminating in speculation at one point that Alibaba would outright buy the "hook up" app sometimes referred to as China's equivalent of US matchmaking app Tinder.

But as with many courtships on the Chinese Internet, this particular one seems to be ending in a slow-motion break-up, though it's unclear what the cause of that might be. Investors don't seem to be worrying about the falling out just yet, at least based on Momo's share price after word emerged that 5 million of its American Depositary Shares (ADSs) were sold by Alibaba. (Chinese article) But I'm not particularly bullish on Momo, mostly because its dating-style app seems like a trendy thing that will probably fall out of fashion at some point.

There's not a whole lot to say about the latest news, which comes in a headline in the Chinese media pointing out the share sale. Based on a filing to the US securities regulator, Alibaba would have netted about $100 million from its sale, equating to about 2.5 percent of Momo's stock. The sale reduced Alibaba's sizable Momo stake to 23.2 percent. Alibaba said in a statement that Momo has been a good investment, and it continues to remain a supportive shareholder.

But much has happened since Alibaba first invested in Momo before its 2014 IPO, when it held around 20 percent. Less than a year after the IPO, Momo announced privatization bid, which was part of a broader wave of similar bids by US-listed Chinese companies looking to leave New York and re-list in China. (previous post) Alibaba was part of the group helping to finance the Momo buyout, which means its share of Momo almost certainly would have jumped to 25-30 percent if the bid had been successful. But then Momo suddenly called off the privatization this year without further explanation.

What's the Motivation?

With all that background in mind, it's time to consider what might be happening behind the scenes that led to this relatively large stake sale. Alibaba certainly doesn't need the money, so it's fairly safe to say it didn't sell the shares to raise cash. Instead, my suspicion is that this could be the first of several sell-downs that Alibaba is planning as a gradual divestment of the company, despite assurances of its commitment to the alliance.

Momo's stock certainly hasn't been hurt by the collapse of its buyout. The original buyout deal last year carried a price of $18.90 per ADS, which is about 8 percent below the company's current stock price. That means US investors are still relatively positive on the company, which may have been one reason it decided to drop the buyout bid.

Momo was also in headlines shortly before its IPO in late 2014  after a former employer accused its founder of corporate malpractice. At that time it became apparent that Momo's founder and CEO Tang Yan was a fairly typical independent Chinese chief executive, who often treat their companies as their own personal fiefdoms and don't like to take advice from outsiders.

Against that backdrop, it's not surprising that Tang probably decided he could do just fine without Alibaba, which would have resulted in this slow-motion divorce we may now be seeing. Of course all this is just educated guessing based on what we're seeing on the surface. But based on my years of following the space, I would say that Tang wants to maintain Momo's position as a standalone company, which probably doesn't bode well for him over the longer term unless he can diversify beyond Momo's current status as a dating app operator.