InvestorPlace Analyst Recommends Momo Stock

An InvestorPlace analyst has classified Momo Inc. stock (NASDAQ: MOMO) as a buy despite poor performance.

The stock, the analysis suggests, may increase in value as China’s middle class continues to expand.

As Chinese consumers accrue more spending power, they are beginning to behave more and more like American consumers.

“That means more smartphones, more social media, more shopping, more traveling… essentially, more everything”, states the author.

As well as a rise in individual purchasing power, China’s economic development will see millions more people accessing the internet in the coming decade.

An increase in the number of digital consumers, many of whom are approaching or surpassing the middle of the global income distribution, creates huge opportunities for Chinese market leaders like Momo.

Momo, often dubbed the ‘Chinese Tinder’, will likely see demand for its services increase as internet penetration extends further into the periphery.

Further, Tinder’s recent financial success, much of which is attributed to the introduction of its higher subscription tier ‘Tinder Gold’, may be a sign of things to come in the wealthier parts of East Asia.

As well as offering dating services, Momo has a significant presence in the Chinese live video streaming market.

Growth in this market is slowing, but figures are still positive and an increase in the size of the user base should protect any investments.

The analysis concludes: “I’m not exactly sure when sentiment will swing on this name — it’s in a clear downtrend — but MOMO is now too cheap to ignore.

“So long as this company continues to grow with the burgeoning Chinese internet economy (which it should), then MOMO stock should head significantly higher over the next several years.”

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