Momo Inc (ADR) (NASDAQ:MOMO) seems like a promising investment opportunity because there are several growth catalysts which will boost the stock price in 2018. In August, Goldman Sachs started covering Momo stock with a price target of $56. According to the data of Yahoo Finance, 16 major investment firms have an average price target of $49. These price targets show a huge upside when compared to the current price.
Momo is quickly expanding its apps and services. The company which once used to provide only location-based social platform now offers a complete entertainment platform where people can interact using video, audio and text. Momo’s platform is used by over 91 million people per month. The platform is attracting new users because of its several new features, including live stream, short video content and “Werewolf”. Werewolf is a social feature in which people can become fictional characters and get new identities to make friends or find new relationships.
Analysts think that Momo’s live stream efforts will bear good results. In China, live streaming market increased by 180% year over year last year. However, there are still some concerns about the growth prospects amid strict regulatory policies of the Chinese government and crackdown against famous live streamers. In August, the company posted second quarter results, after which Momo stock crashed, mainly because of the lack of growth in video business, which accounts for over 80% of the firm’s total revenue.
However, investors should note that Momo started paying famous live streamers in order to market and expand its new live streaming features. This spending directly affected revenue in the quarter. Still, live streaming revenue increased by 22% sequentially in the second quarter. Momo has also succeeded in increasing average revenue per paying user (ARPPU) and user engagement, which may give it a steadier base for future growth.
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