Momo Inc. (MOMO), the owner of several online dating websites, is currently trading more than 25% below its 52-week high. Due to previous difficulties, the company has experienced a decline in quotations. Is Momo likely to experience growth again?
Momo recently released inconsistent results for the first quarter. As a company, it is experiencing a decline in revenues, while on the other hand, its total user base has increased. Several factors are contributing to Momo’s declining revenue. China’s video app market, dating app market, and mobile games market are highly competitive. Regulations’ requirements for posted videos also exert pressure on businesses. This resulted in Momo and Tantan(a dating platform) suspending their services for several months in 2019 before complying with these requirements. This loss of income does not seem to be compensated by the pandemic, as at this time, people were spending less money on virtual gifts and premium subscriptions, which constitute most of Momo’s revenue.
The company’s quarterly revenues fell to 3.47 billion yuan ($ 529.7 million) in the most recent quarter, down 3.4 % year-on-year. This is about $ 3 million less than analysts expected. Earnings per American depositary share of $0.44 surpassed analysts’ expectations despite a decline of 14% in adjusted net income, to 634 million yuan ($ 96.7 million). Due to all of the above-mentioned negative factors, Momo expects that revenue will decline by 4 – 7 % during the second quarter.
As reported by Momo Inc. (MOMO), it also said the number of monthly active users grew 7% YoY and 1% sequentially to 115.3 million in the past quarter. However, Momo and Tantan have also lost some paying users as the number of paying users dropped from 12.8 to 12.6 million. In other words, Tantan’s number of paid users declined by 17 % YoY and by 8 % sequentially to 3.5 million because Tantan is still struggling with the “low efficiency” of its marketing efforts, and the optimization of marketing costs is limiting overall user growth.
According to company executives, Momo made a good start in 2021, but it still faces long-term challenges. Within two or three quarters, investors can determine whether the company will solve these problems.
Yesterday, Momo Inc. (MOMO) was down -2.86% to trade at $ 15.30 at last check. Momo Inc.’s stock closed at $15.75 at the close of trading on Monday. 3.4 million shares were traded, exceeding the average volume of 2.96 million over the last three months. During the trading session, the stock oscillated between $15.21 and $15.861. Its earnings per share were 1.41. MOMO shares gained 6.47% of its stock value over the last five sessions, moved 9.68% over the past month, and are up 14.23% on a year-to-date basis. Currently, the stock’s 50-day moving average is $14.60, below the 200-day moving average of $15.16. Additionally, the stock has an RSI of 59.91 at present.