One of last week's biggest gainers was Momo (NASDAQ:MOMO), rising 10.1% ahead of next week's pivotal quarterly report. There wasn't any company-specific news breaking on Momo, but many Chinese growth stocks inched higher after Alibaba (NYSE:BABA) posted better-than-expected Singles Day results.
Singles Day is a shopping holiday along the lines of Prime Day or Black Friday. It's popular with China's young consumers, celebrating being single -- hence the name and Nov. 11, or 11/11, date. Alibaba is now in its ninth year in promoting the celebration of romantic independence as the mother of all shopping days. Alibaba reported $25.3 billion in gross merchandise volume transacted through its platform on Singles Day, 39% ahead of the previous year's performance.
Momo isn't an e-commerce juggernaut, but as the provider of a fast-growing Chinese dating app, it's obviously also magnetic to China's unattached adults. There's naturally nothing to stop married or otherwise attached deal seekers from taking advantage of Singles Day -- or dating apps for that matter -- but the success of Singles Day confirms that China's young consumers aren't afraid to lean on technology to get what they want, and that's ultimately great news for Momo and its model.
On the rebound
Shares of Momo shed nearly a fifth of their value the week it posted second-quarter results, in August. The results may have seemed explosive at first glance, with revenue and earnings more than tripling since the prior year, but the quarter-over-quarter comparisons weren't kind. Momo gave flattish top-line guidance for the third quarter and closed out the second quarter with 4.1 million paying members, the same tally it reported three months earlier.
Last week's rally and the healthy gains midway through Monday's trading whisked Momo stock to levels it hasn't seen in more than a month, but the shares are still trading well below summertime highs before the crushing post-earnings tumble. Thus, the stage is set for Momo's report -- to be released before market open on Nov. 28. To keep last week's rally going beyond the current holiday-shortened trading week, Momo will need a strong showing. Giving a strong guidance, posting a reasonable sequential uptick in premium memberships, and continuing to blow through Wall Street's profit targets will go a long way to keep the stock's recovery on track.