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Momo Inc: The Story Beyond Live Streaming

Momo Inc: The Story Beyond Live Streaming

A deep dive of a once Chinese live stream story transforming to a dominant player in the open social and dating industry.
Momo Inc company analysis
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This 6,100 words deep dive into Momo Inc. is a benefit exclusively for Junto members.

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When I first set out to dive into Momo Inc. I felt I had a good grip on understanding the business and where it was heading.

But after spending an hour or two reading through the annual report, I found that was not necessarily the case. Momo’s offerings are rather simple to understand, but how they monetize them—and how this will change in the future—is a bit more tricky.

Therefore, there is a certain degree of uncertainty involved with Momo’s future prospects. And as I will argue in this note, that is highly reflected in the company’s current market price. So much so that I would argue the current price reflects a significant margin of safety despite the uncertainties surrounding the business.

To be clear before diving in, Momo is once again a Chinese technology business. Compared to Western parallels, Chinese technology businesses have always been priced more gently, especially now being afflicted by negative market sentiment from the PRC meddling with tech companies and the talks of ADR delistings as a result of the ongoing U.S.-China trade war. That is indeed the case of Momo, and after spending a decent time on the company on and off over the past month, I made the conclusion that it is too cheap—one of the rare ones to find in this market environment. I also think I know why it is too cheap.

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2 Responses

  1. Excellent analysis as usual, Oliver. I also am exceedingly interested in foreign markets because of their less efficient nature, at least compared with the US.

    While I am not quite as bullish as your are on Momo, I still think you make a good case for investment. I just think the competition is too fierce in the space for me to be interested.

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