We're a couple of weeks away from Momo (MOMO 2.14%) posting its fourth-quarter results, and investors are probably nervous. The Chinese social-video and online-dating specialist burned investors last time out, landing at the low end of its earlier revenue forecast and offering up guidance calling for continuing deceleration. Analysts at Citi and Morgan Stanley would go on to downgrade the stock following the uninspiring results, sending the shares to their lowest levels in nearly a year.

Momo stock has started to bounce back in recent weeks. The shares are trading 49% higher in 2019, but it's not as if analysts are buying the bounce. They see revenue rising 38% when Momo reports in two weeks, a big top-line gain for most companies but well shy of the 43% to 47% growth that the company itself was forecasting for the period late last year. Wall Street's also bracing for flattish earnings growth for the quarter, but Momo watchers know that the dot-com speedster has consistently landed ahead of analyst profit targets in the past. 

Check out the latest Momo earnings call transcript.

Momo app on a mobile phone.

Image source: Momo.

Taking the longer view

If there's a lot of uncertainty about what Momo will report in two weeks, imagine trying to paint a portrait of where Momo will be come 2024. The stock is pretty volatile now given its high beta and wild trading swings, and that's before we consider the fickle nature of mobile app popularity.

Revenue at Momo has more than tripled over the past two years -- popping 15-fold over the past three years -- on the booming popularity of its live social video platform. Momo got its start in online dating, but these days the lion's share of its revenue is being generated by its live-video features that finds folks broadcasting their streams with or without the intention of hooking up with somebody else. Live video accounted for 76% of the revenue in Momo's latest quarter.

Momo is hot right now. It commands an audience of 110.5 million monthly active users, up from 94.4 million a year earlier, but revenue is naturally going up even faster than that as it gets better about getting freeloaders to pay up. The number of paying users for its live video service has grown from 7.3 million to 12.5 million over the past year. 

None of this means that Momo is resting on its laurels. It acquired social dating app Tantan last year. It has been ramping up the monetization of the virtual gifts that members can buy for one another, a niche that has seen its revenue triple over the past year. 

Trying to guess how the popularity of Momo's applications will hold up in a year is challenging, and stretching out our reach to five years makes it impossible. No one knows what the hot mobile platforms will be in 2024. One thing that does help Momo here is that it is very profitable, with a cash-rich balance sheet to boot. Momo has nearly $1.5 billion in cash on its books, so if it sees an upstart gaining traction, it wouldn't be a shock to see Momo try to buy it out instead of having to deal with it down the line. Tantan won't be the last of Momo's purchases. 

You don't need to invest in a time capsule. Momo will have 20 quarterly reports in the next five years, and you will see any early signs of cracking. One can argue that it may already be showing signs of mortality. Landing at the low end of its revenue guidance in the third quarter dinged the stock last time, and after a steady diet of beating Wall Street's quarterly profit targets by a double-digit percentage margin, it has slipped to single-digit percentage beats in back-to-back quarters.

Quarter EPS Estimate Actual EPS Surprise
Q1 2017 $0.32 $0.44 38%
Q2 2017 $0.31 $0.35 13%
Q3 2017 $0.38 $0.45 18%
Q4 2017 $0.46 $0.53 15%
Q1 2018 $0.50 $0.69 38%
Q2 2018 $0.61 $0.66 8%
Q3 2018 $0.52 $0.53 2%

Data source: Yahoo! Finance.

Keep an eye on how active users are trending. See if Momo grows more acquisition-hungry than usual, a sign that it may be looking for new growth drivers. It also doesn't hurt to see how expenses are climbing relative to revenue, trying to smoke out if the company is paying more for its growth.

Momo is hot now, but it's also cheap at just 17 times trailing earnings with a forward multiple below 13. It can deliver market-thumping returns in the next five years if it's able to sustain and ideally build on its business, and thankfully investors will get quarterly peeks into how things are going.