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Why Momo, Inc. Stock Soared Today

By Steve Symington – May 29, 2018 at 5:45PM

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The company behind the "Tinder of China" had an excellent start to the year. Here's what investors need to know.

What happened

Shares of Momo Inc. (MOMO -8.54%) gained 15.2% on Tuesday after the Chinese internet media company announced strong quarterly results.

Quarterly revenue climbed 64% year over year to $435.1 million, well above consensus estimates for $396.3 million. On the bottom line, that translated to adjusted net income of $142.3 million, or $0.69 per American depositary share (ADS), again above estimates for $0.50 per ADS and up from $0.44 in the year-ago period.

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Image source: Getty Images.

So what

Momo Chairman and CEO Yan Tang called it a "great start" to 2018, stating that the company has made "outstanding" progress on the strategic priorities outlined last quarter.

"Our community continued to grow in size and engagements despite the negative seasonality, thanks to the product and marketing initiatives we have been taking in recent quarters," Tang added. "The content ecosystem continues to improve, driving robust organic growth momentum for live streaming business."

Momo also closed on its previously announced acquisition of dating app Tantan in May -- a cash and stock deal valued at nearly $800 million -- paving the way for the combined companies to move forward, Tang says, " as a dominant player in China's open social territory." 

Now what

Additionally, for the second quarter of 2018, Momo expects revenue to be between $470 million and $485 million, good for year-over-year growth of 51% to 55%. That includes around $4.5 million from Tantan for the month of June, but is far above the $429.3 million most investors were expecting.

In the end, this was a straightforward quarterly beat followed by impressive forward guidance, so it's no surprise to see Momo stock soaring in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Momo. The Motley Fool has a disclosure policy.

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