2020-09-17
(7 Pages, 9 graphs and tables)
Listen to analyst’s audio summary
- We expect Momo to report a weak quarter with its C2Q20 top line miss cons. by (1.1%), while its GAAP op income and GAAP net income miss cons. by (2.7%) and (2.2%), separately. Besides, its C3Q20 guidance will miss cons. by (2.4%). The weak guidance is mainly because Momo’s live streaming business suffer from the pressure of competition.
- Momo’s live streaming revenue is expected to decline (19%)YoY in 2Q20 and we think Momo is going to be suppressed by Douyin in the long run.
- Momo is trading at 6x 1-y forward P/E, however, we see Momo is facing strong competition and lack short term catalyst. We cut our TP for Momo from US$23 to US$20 and downgrade to HOLD.
|
Live streaming recovers slower than our expected According to our tracking data, Momo’s C2Q20 live video service revenue will decline (19%)YoY, increase 7.6%QoQ to RMB 2.51bn, lower than our previous estimate by (3.5)%. Momo’s live streaming business hasn’t recovered and may continue to suffer from pressure because (1)According to our industry check with MCNs, live streaming users’ willingness to tip hasn’t recovered in second quarter. (2) More MCNs will shift their resources such as talented performers to short-video platforms such as Douyin and Kwaishou. Moreover, Momo is increasing revenue share to top MCNs to try to keep top MCNs and performers in Momo, which may post pressure on margin in the long term. Soul’s MAU is catching up with Tantan’s According to QuestMobile, Tantan’s MAU decreases (21%)YoY and increase 2.2% MoM in May and decrease (8.8%)YoY and (2.7%) MoM in June while traffic of Soul, another top dating app, begins to recover slowly in second quarter with MAU decrease (7.2%)YoY and increase 2.0% MoM in May and increase (0.6)YoY and 3.2% MoM in June. Besides, Soul becomes a more serious competitor for Tantan, the MAU of the former is 18.8mn in June and the MAU of the latter is 13.2mn in June. (TBC) |
Click to download the full report