Will Momo become next Alibaba?

If you like and own Alibaba Group (BABA) stock then the shares of the Chinese instant-messaging service Momo (MOMO) could be your next favorite. Market analysts believe that in terms of profitability, Momo stock has the prospect of turning into the next Alibaba. The shares have jumped by 80% for the year-to-date period and 8% for the past 52 weeks.

Investors have remained cautious when trading Chinese companies’ stock due to the mounting concerns of a trade war between the US and China. Under the recent developments, President Donald Trump’s administration has proposed a 10% tariff on $200 billion worth of Chinese goods. This is in addition to the 25% duties that are levied on $34 billion of goods coming from China. In response, China reciprocated by aiming for the same dollar value of US goods.

Analysts believe that in terms of profitability, Momo stock has the prospect of turning into the next Alibaba

Research firm Spruce Point believes that Momo’s investor base is comprised of two distinct cohorts; fundamental investors taking management’s word at face value and momentum/swing traders trying to play the stock’s trend. Both are inattentive to the serious risks associated with a Momo investment. Momo’s current investor base primarily consists of the US retail investors and a select number of institutions.

The risk of an investment in Momo has worsened heavily as It isn’t a North American based company. The China-based media company offers a Mandarin-based product to Chinese consumers and conducts its business under the supervision of the Ministry of Culture (MOC) and State Administration of Radio, Film, and Television (SARFT).

Market analysts have listed out the expectations of Momo’s stock behavior. They believe that the stock has been behaving differently as shares trade lower than the previous session most of the time, they trade higher to a lesser extent, stay dead-even for the least number of time.

Shares of Momo traded down about 3% during the regular trading session on the Nasdaq. The stock had been trading between $22.49 and $54.24 for the past 52 weeks.