Growth Plan
Momo has a stable cash flow that is better than most of its competitors, which allows the company to pursue its expansion program with focus on product revamp. For retaining the current momentum, the company needs to execute the initiatives effectively, considering the recent slowdown in user growth.
Like most of its peers, Momo is currently facing a high level of uncertainty. It is likely that disruptions caused by the covid-19 outbreak would weigh on its first-quarter results. Taking a cue from the recent dip in its value, analysts recommend buying the stock and forecast a strong recovery later this year.
Q3 Performance
In the third quarter, the number of monthly active users climbed to more than 114 million. There was a 22% annual growth in revenues, which also surpassed the market’s prediction. The top-line growth was supported by a further uptick in the number of paying users, which translated into an increase in earnings.
Competition
Last week, Momo’s competitor Weibo Corp. (WB) said its fourth-quarter earnings dropped, hurt by a decline in advertising and marketing revenues. The bottom-line was also impacted by higher costs.
This week, Momo’s shares slipped below the $20-mark for the first time in more than three years as investors withdrew from the market en masse due to the coronavirus scare. The stock dropped 45% since the beginning of 2020, paring most of last year’s gains.