Tantan turns over around $50 million per annum, and is China’s largest dedicated casual dating app. It profit is only 5% of what Momo’s is, however.
The acquisition, which cost Momo upwards of $600 million, is a “critical strategic upgrade to cover a greater range of user demographics and needs” according to Tantan CEO Mr. Yu Wang.
Momo CEO Yan Tang makes the case that because the demographics do not overlap much between the two platforms, there is huge potential for cross-fertilization following the acquisition.
There may be some reasons to doubt the potential for growth, however – Tantan is seeing a slight decline in DAU amid a rise in MAU at present, indicating a loss of user engagement and retention (or ‘stickiness’).
Another risk is a slight slowing in the demand for live broadcast content, which underpins much of Momo’s business model.
The article concludes:
“Two ways are possible for Tantan to bring an increase in revenue significant enough to maybe open a new era for MOMO (a new peak in stock prices hopefully), as far as we can see.
“a. Tantan can learn from Tinder and include more levels of payments, resulting in an increase in paying user percentages and ARPU.
“b. To improve the conversion efficiency from Tantan’s users to MOMO’s.”
Read more here.