Analysts Investigate Reasons Behind Momo’s Declining Stock Price

Written by Dominic Whitlock

The Motley Fool analyst Jeremy Bowman has published an article looking into why Momo saw its stock more than halve in 2020.

The online dating industry generally flourished throughout the year with people being told to stay at home. The rise of the virtual dating trend meant singles were able to connect with new people and forge new relationships despite the difficult restrictions.

Following an initial drop, Match Group’s stock price grew by more than 200% between the middle of March and the end of December, while Spark Networks was also up by almost 150% in the same period.

However, Bowman speculates that Momo being based in China, the country where it’s believed the COVID-19 outbreak began, is one of the reasons why it initially struggled to recover.

Momo then published its second quarter report which included declining revenues and a prediction that its third quarter results would be even worse. This was at a time when the Chinese economy was returning to normal, but the dating company quickly dropped by 30%.

Some analysts are predicting that Momo could see moderate signs of recovery throughout 2021, but investors are being warned to be careful. 

Chief Operating Officer Li Wang was appointed as the new CEO at the end of October and is expected to take the necessary decisive actions to help set the business back on the right track.

A new strategy for flagship dating app Tantan was announced over the new year. The plan is referred to as ‘Social+’ and will see a emphasis on ‘pan-entertainment’, including offline experiences and original film content.

Read more here.

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