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Why Yalla Stock Popped on Monday Morning

By Evan Niu, CFA - Mar 15, 2021 at 1:11PM

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The Middle Eastern social media specialist reports fourth-quarter earnings.

What happened

Shares of Yalla Group (YALA 6.52%) popped by as much as 15% this morning after the company reported fourth-quarter earnings. The results were mixed relative to analyst expectations. There is only one Wall Street analyst company (Oppenheimer) that covers the company. As of 11:50 a.m. EDT, the stock had given back most of those gains and was up just 2%.

So what

Revenue in the fourth quarter came in at $48.3 million, ahead of the $41.2 million in sales the market was expecting. That resulted in adjusted earnings per American depositary share (ADS) of $0.06, which was below the consensus estimate of $0.12 per ADS in adjusted profits. The Middle Eastern social media technology company said it now has 16.4 million total monthly active users (MAUs) across its two primary platforms. Total paying users were 5.2 million at the end of 2020.

Green stock chart showing a fluctuating price.

Image source: Getty Images.

"With the successful IPO event in Dubai generating extensive brand awareness in the Middle East and North Africa [MENA] region, our highly experienced marketing team maximized this exposure by continually running innovative and deeply resonating campaigns, specifically tailored to the local culture," CEO Yang Tao said in a statement. "With these efforts, our MAUs increased 15% versus the previous quarter, reaching 16.4 million."

Now what

In terms of guidance, Yalla expects revenue in the first quarter to be in the range of 60 million to $63 million, well above the $42.7 million in sales that Oppenheimer is modeling for.

"As we continue ahead in 2021 with the goal of building the most popular destination for online social networking and entertainment in MENA, we are focused on three key priority areas: growing our Yalla community and cultivating a friendly and engaging environment, providing users with a quality and localized product experience, and diversifying our platform's product portfolio to create brand extension and deeper loyalty," the chief executive added.

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