Do sell-offs point to a buying opportunity in this Chinese social media company?
Keith Noonan (TMFNoons) Oct 10, 2017 at 7:19AM
What happened
Momo Inc. (NASDAQ:MOMO) stock lost 18.7% of its value in September, according to data from S&P Global Market Intelligence. The Chinese social media company's seemingly impressive earnings release in August was followed by sell-offs that carried through to September as investors weighed slowing growth against the stock's premium valuation.
The chart below tracks Momo stock's performance over the last three months.
Stock chart showing Momo stock decreasing 19.8% over the last three months.
So what
Video accounted for 83% of the company's sales last quarter, but not every aspect of the company's streaming business is delivering growth. The company added 6.1 million new monthly active users from its March-ended quarter to its June-ended quarter, reaching 91.3 million, however the number of paying live-stream viewers stayed flat at 4.1 million.
Hosting and serving videos is cost intensive, so indications that Momo is having trouble expanding its paying user base, along with comments from management that overall engagement was roughly flat, could signal a substantial growth slowdown in the near future. The company's operating expenses have already grown faster than sales in its last two quarters, further complicating the picture.
On the other hand, paid subscriptions are not the company's only, or most important, revenue stream. Even without paid-user growth, the company's average revenue per monthly active user increased nearly 160% year over year last quarter.
Now what
Momo shares trade at roughly 19 times forward earnings estimates. Given the company's impressive growth, that's a valuation that could point to a buying opportunity for investors who are willing weather potential volatility with the stock. Looking at another metric, the company's forward price-to-earnings-growth ratio is roughly 0.15 -- another indicator that suggests the stock could be a good buy at current prices.
Recent MOMO News
- Apple CEO visits Hello Group Inc. and is impressed with inSpaze on Apple Vision Pro • PR Newswire (US) • 03/26/2024 09:00:00 AM
- Hello Group Inc. Announces Unaudited Financial Results for the Fourth Quarter and Fiscal Year 2023 • PR Newswire (US) • 03/14/2024 08:12:00 AM
- Hello Group to Report Fourth Quarter and Fiscal Year 2023 Results on March 14, 2024 • PR Newswire (US) • 02/23/2024 01:00:00 AM
- Hello Group Inc. Launches the Native Social App 'inSpaze' for Apple Vision Pro • PR Newswire (US) • 02/05/2024 07:00:00 AM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 12/20/2023 09:32:54 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 12/19/2023 09:58:52 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 12/18/2023 09:22:22 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 12/15/2023 09:50:01 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 12/14/2023 09:13:16 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 12/13/2023 09:40:53 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 12/08/2023 11:49:57 AM
- Apple Boosts Vietnam Production, Broadcom Revenue Miss, Stellantis Job Cuts – Latest Updates • IH Market News • 12/08/2023 11:23:53 AM
- Hello Group Inc. Announces Unaudited Financial Results for the Third Quarter of 2023 • PR Newswire (US) • 12/08/2023 08:25:00 AM
- Hello Group to Report Third Quarter 2023 Results on December 8, 2023 • PR Newswire (US) • 11/17/2023 10:00:00 AM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 09/19/2023 10:41:52 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 09/18/2023 10:17:35 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 08/31/2023 08:03:08 PM
- Hello Group Inc. Announces Unaudited Financial Results for the Second Quarter of 2023 • PR Newswire (US) • 08/31/2023 07:10:00 AM
- Hello Group to Report Second Quarter 2023 Results on August 31, 2023 • PR Newswire (US) • 08/18/2023 10:00:00 AM
- Form SC TO-I/A - Tender offer statement by Issuer: [Amend] • Edgar (US Regulatory) • 06/30/2023 01:21:37 PM
- Hello Group Inc. Announces the Results of the Repurchase Right Offer for its 1.25% Convertible Senior Notes due 2025 • PR Newswire (US) • 06/30/2023 10:00:00 AM
- Hello Group Inc. Announces Unaudited Financial Results for the First Quarter of 2023 • PR Newswire (US) • 06/06/2023 07:30:00 AM
- Hello Group to Report First Quarter 2023 Results on June 6, 2023 • PR Newswire (US) • 05/18/2023 02:12:00 AM
- Hello Group Inc. Announces Repurchase Right Notification for 1.25% Convertible Senior Notes due 2025 • PR Newswire (US) • 05/05/2023 11:08:00 AM
- Hello Group Files Annual Report on Form 20-F for Fiscal Year 2022 • PR Newswire (US) • 04/25/2023 10:57:00 AM
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