Momo Inc.$30.56(1.83%)

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dmoney Well-calibrated. Correct 80 % of the time. 4199.01
$28 $40 forecast for 2020-01-31

Massive crash, down more than 20% in the last few days. I can't find any news other than the general bear sentiment in the Chinese market following the fear of a massive flu pandemic. Momo had rallied for weeks, so probably a lot of people that wanted to secure some profit. I expect this fall to be short lasting and should bottom out at between 27 and 30.

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dmoney Well-calibrated. Correct 80 % of the time. 4199.01
$30 $70 forecast for 2020-12-31

Momo Inc is a Chinese social entertainment platform founded in 2011. The company has has an explosive growth in revenue for the last few years with a 50% yearly growth in 2018 and 2019 and at the same time posting great earnings with a profit margin of 15-25%.

Momo is valued at $8billion. The market leader YY is valued at $5 billion even though their revenues are 30% higher, reflecting the markets belief in Momo's continued growth. Both companies have about the same forward P/E of 12, which is indeed very cheap for fast growing companies. YY however has a more solid balance sheet with less debt and almost twice the cash reserve.

2020 will be very interesting as people will be very curious to see which of the two companies manages to grow faster and wether Momo are closing in on the market leader. If they do manage to do this it would be super positive for the stock price development. On the other hand, if Momo posts a bad quarter with declining user growth the stock will be punished hard.

I believe Momo will increase over the next two years, but it will be a bumpy road.

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dmoney Well-calibrated. Correct 80 % of the time. 4199.01 (edited)
$24.5 $32 forecast for 2020-01-31

Momo inc might fall further. The flu epidemic is not under control and accelerating, but I would be very surprised if the fall is long lasting. Should be a good buying opportunity.

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