What happened

Shares of Momo (NASDAQ:MOMO), the Chinese online dating service, took a dive last year due to a combination of factors, including the coronavirus pandemic and a consistent decline in sales as it tightened its video content. According to data from S&P Global Market Intelligence, the stock finished last year down 58%. 

As you can see from the chart below, shares declined throughout the year.

MOMO Chart

MOMO data by YCharts

So what

The novel coronavirus originated in China, which was the first country to experience its economic impact. After a brief pop to start the year, Momo shares fell as concerns about the coronavirus in China began to impact the market. 

A person looks at their smartphone.

Image source: Getty Images.

In March, the stock fell as the pandemic spread, and as Momo said that first-quarter revenue would decline due to the impact of the crisis.  

At the end of May, the stock sunk again as it reported a 3.5% decline in revenue for the first quarter. It also forecast a high-single-digit decline in revenues for the second quarter due to decreased advertising demand and a slump in its user base.

Finally, the stock plunged when the second-quarter report came out in early September. The company at that time forecast an even sharper mid-teens decline in revenue for the third quarter. That indicated that its business was not recovering, even though the Chinese economy normalized after shutting down earlier in the year to control the virus.

Now what

Momo also forecast a roughly 20% decline in revenue in the fourth quarter. The company has blamed the shortfall on structural reforms in its core video content business. Those initiatives follow a crackdown from the Chinese government last year, which led to the removal of some of its apps from web app stores.

Momo had been a winner on the market before last year's collapse. Analysts expect the company to return to modest growth this year. If that happens, the stock could be a bargain right now, but investors may want to wait for a clear sign that the turnaround has begun first.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.