InvestorPlace Analyses Momo Stock

An article in InvestorPlace has listed three pros and three cons of the Chinese tech giant Momo’s stock.

Momo, a location-based services instant messaging app, gained momentum in China as a dating platform.

One ‘con’ of investing in the app may be that it doesn’t stay true to this origin, however, with new features like event live-streaming taking it further and further away from the dating niche.

Another worry is the relatively high turnover in board members – three of nine quit after the last earnings report.

Thirdly, Momo has often guided beneath analyst expectations. While it has topped earnings estimates, its stock often dips significantly when this occurs.

There are, however, a number of factors which bring promise to owning Momo stock.

Income and revenue have close to doubled year-on-year, and the video streaming revenued almost tripled in the same time period.

The marketing spend is set to be reigned in after “reckless and overeager ad spending” during the transition to a more complete entertainment platform. The move will likely provide a boost to profits.

Lastly, due to the management shakeup and uncertainty around the transition, Momo stock is selling for just 15x earnings.

The article concludes: “At just 15x earnings, and with that growth rate, shares are set for a big move. But if management misses expectations, look out below.”

Read more here.