A Diversifying Momo May Be Undervalued, Says Analyst

Seeking Alpha analyst Dominic Teo has argued that Momo may be significantly undervalued at the turn of the year, as it has strong fundamentals and is opening up new avenues for monetisation.

Momo’s stock has fallen from over $53 in June to around $24 at the time of writing, a decline triggered by the release of a damning Spruce Point Capital report on the social media platform’s uncertain position titled “Mo(mo) Money, Mo(mo) problems”.

Since then, a tentative Q4 outlook has seen the price fall further, despite the high-profile acquisition of swipe-based dating app Tantan.

Teo argues that Momo is still a leader in a lucrative niche – one-to-many streaming – and that China only has 53% internet penetration at present, so this audience has tremendous potential to expand.

Moreover, the social giant is reliably opening up new features for monetisation. Momo users can make use of five services in addition to live streaming at present, including the social game ‘Werewolf’ and the interest-based quick chat feature ‘Kuai Liao’.

Management is active in strengthening the product offering, both by implementing new functionality and attracting more talented streamers. It has moved into the reality TV space in a bid to attract more content creators, for example.

Property Tantan began to monetise around one year ago, and has already built a paid user base of over 3.5 million people. The app is said to have almost 100 million monthly active users.

One threat to Momo is the recently launched Yizhibo, a streaming platform built on the back of Twitter-esque Weibo.

The new player saw extremely strong user acquisition in 2017, and has continued to attract celebrity streamers via easy integration with existing Weibo accounts. Weibo has close to 400 million monthly active users.

Read more here.