Momo has seen its stock plummet, despite posting another strong set of quarterly earnings.
Shares plunged by 20% yesterday to close at 36.02 after the Chinese tech company released its Q2 results.
The results saw Momo’s net revenues increase by 215% year-over-year to $312.2m, while net incomes increased to $60.8m from $15.4m the previous year.
In terms of the company’s live video service, this generated revenues of $259.4m in the second quarter of 2017, compared to $212.6m in Q1.
In addition to this, Momo’s MAU count increased to 91.3m in June 2017 compared to 74.8m in June 2016.
Yan Tang, Chairman and CEO of Momo said: ”I’m pleased that we delivered another strong quarter to our shareholders.
“User base growth continued to accelerate, driven by the expansion of our video content ecosystem.
“The usage of short video service has reached new milestones and revenues from live video service has hit new record highs.”
Investors, however, were concerned by the lack of growth in the number of paying members of its live video streaming service.
This figure stayed at 4.1m from the previous quarter, which was still an increase of 0.9m from the year before.
Yan Tang also revealed that the average time spent on the app by each DAU had remained stable compared to the year before and previous quarters.
Bloomberg said this suggested that “investors see an early hint that Momo’s customer base isn’t engaged enough to want to pay for premium access.”
Alongside this was an 189% increase in cost and expenses, which hit $246m in Q2, up from $85.2m the year before.
Momo said this increase was due to the company giving more of a revenue share to broadcasters on its live video streaming service.
Marketing expenses also increased in Q2, Momo having signed a set of partnerships with music industry heavyweights in Q2 for a new campaign.
Called the Momo Music Plan, the new program will see users of the location-based Chinese app vote to choose a shortlist of aspiring singers who currently broadcast live on Momo’s streaming service.
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