In June, spent the vibrant International Children's Day, the U. S. stock market also enjoyed the vitality of Chinese stocks. IQIYI, Inc. and Bilibili Inc. swept away the haze of listing and went up all the way, and HUYA Inc. is about to achieve nearly twice the increase since the listing. Another is Momo Inc, who has been ridiculed as a "hormonal concentration camp". As of June 8, Momo Inc's share price has risen 112.46% this year, with a market capitalization of $10.4 billion.
Here are the general TMT companies with a market capitalization of more than $10 billion as of June:
(source: Futu Securities)
Looking at the above table, Momo Inc has a unique feature, that is, it is the only company that does not have a PC.
This means that Momo Inc has grown up by making good mobile products since its inception in 2011, taking advantage of the rapid growth of dividends of mobile Internet users in China.
To be able to enter the ten billion club, the beautiful financial report plays an important role. Take a brief look first.
Recently, Momo Inc's financial results for the first quarter of 2018 can see three bright spots:
1. Continuous growth of revenue and net profit
(source: Futu Securities)
In the first quarter of 2018, Momo Inc's revenue reached 2.76 billion yuan, an increase of 64% over the same period last year, and its net profit was 900 million yuan, an increase of 57% over the same period last year.
2. Momo Inc's live broadcast income accounts for more than 85%, and value-added income accounts for 8%.
(source: Futu Securities)
Live broadcast is Momo Inc's main source of revenue, accounting for 85.5% of the total revenue of 2.76 billion yuan. At present, revenue and profit depend greatly on the live broadcast business, and it is also one of the hidden dangers for the company's continued growth in performance in the future. However, since Momo Inc opened live broadcast in the past 16 years, live broadcast revenue has shown steady growth and repeatedly set new highs.
(source: Momo Inc Financial report)
In addition, value-added services 240 million yuan accounted for 8.7%, mobile marketing revenue 120 million accounted for 4.3%.
3. the number of users exceeded expectations and reached a record high, with 100 million daily active users and an increase in the number of paying users.
As of March 31, 2018, the number of monthly active users of Momo Inc reached 103.3 million, a record high. The number of paying users of the live streaming service reached 4.4 million in the first quarter of 2018, with a total of 8.1 million if value-added paying users are added.
For comparison, the number of paying users of Momo Inc's video live streaming service remained at about 4.1 million in the first three quarters of 2017, compared with 4.3 million in the fourth quarter of 2017.
(source: Momo Inc Financial report)
On the whole, Momo Inc reported gratifying results in the first quarter of 18 years, with all the data reaching an all-time high, and the share price brought by it was also reflected.
However, under the soaring stock price, is there a solid support, and how far can Momo Inc go in the future?
With several major worries in mind, continue to take a look.
Momo Inc is a live broadcast platform in terms of revenue percentage. Is the moat still wide?
To answer this question, we have to talk about Momo Inc's current business model. As a live broadcast platform, HUYA Inc. 's main business is game live broadcasting. Yingke and YY are based on the show, and they all have one thing in common, that is, they rely on the head VJ to bring in the main users and income, so the head VJ also accounts for a large proportion of expenses. Tens of millions or even tens of millions of anchor contracts are also common on platforms such as DouYu International Holdings Limited, HUYA Inc. and YY.
Momo Inc CEO Tang Yan clearly set the direction of the platform as "strangers socializing" at the beginning of the company's establishment.
This route has not changed after Momo Inc opened up the live broadcast business, so the live broadcast mode and service are more focused on "social". From the perspective of user experience, live streaming and diversified functions such as games, radio stations and hand-to-hand questions are more like channels through which Momo Inc users can use it in APP and increase interaction with others.
For example, many of Momo Inc's functions have "same city" and "nearby" options, such as radio stations, city videos, attachment groups, people with attachments, and "dots" with functions similar to Tinder-- users can browse the status and photos of other users at random, and if they like each other, they can enter the chat interface to match users. At the same time, this function makes full use of the location mode of LBS to clearly show the location and distance of users. Enhances the possibility of extending the relationship offline. Click to enter the live broadcast of Momo Inc, and the ones at the top of the categories of dancing, appearance and music are "nearby" and "making friends with many people".
(photo source: Momo Inc APP)
(photo source: Momo Inc APP)
This is also what Tang Yan has always stressed that Momo Inc is different from other live streaming platforms. After 16 years of vigorous development of live streaming, 17 years have entered the era of short video. With the rise of Douyin and Kuaishou Technology, Momo Inc naturally accelerated the layout of short videos. But the most important point is that whether live or short videos, Momo Inc is unique to socializing around strangers.
The social experience of strangers is essentially different from that of other live broadcasts. Watching live streaming consumes content and pays for the content you like. And Momo Inc live experience, through participation and consumption, access to the fun of social interaction between strangers, and has the possibility of real communication. This is something else that cannot be done, and it is also where Momo Inc's "moat" lies.
(source: Ari)
According to iResearch data, Momo Inc leads the industry in the use of user equipment in the mobile live broadcast platform.
Momo Inc's strong profitability lies in good cost control.
Live broadcasting is a lucrative business, but most platforms restrict the head anchors to spend too much.
(source: Futu Securities)
In the financial comparison between Momo Inc and the main head live broadcast platform, it is obvious that the gross profit margin of Momo Inc's live broadcast service is very high. this is mainly due to the fact that the proportion of revenue-sharing fees to total revenue of the business is much lower than that of other live streaming platforms. Although Momo Inc launched a trade union incentive mechanism to expand the scale of live broadcasting from 2016 to 2017, and the proportion of income-sharing expenses has increased, it still accounts for less than 40% of revenue, but the fees of Yingke, HUYA Inc. and YY almost all account for more than 50% of total revenue.
For the live broadcast platform, the income sharing expenses and bandwidth costs with anchors and trade unions are the two parts that account for the largest proportion of operating costs. The income-sharing expenses of anchors and trade unions account for an excessive proportion of revenue, which greatly limits the profitability of head live players like Yingke, HUYA Inc. and YY. Another ingenious thing about Momo Inc is that since the users are all mobile users, the bandwidth cost will be much lower than that of the PC-side live broadcast platform.
Momo Inc's user traffic is not generated by the mode that the anchors generate content, but through the social scenes of strangers provided by Momo Inc. Momo Inc's social nature determines that he does not need to use a lot of money, signing head anchors and trade unions to get users like the live broadcast platform, and the scene of strangers making friends can meet the users with specific needs.
So Momo Inc's high valuation, first of all, lies in its lower costs than the live broadcast platform, with greater profit space and imagination.
What will happen in the future? Momo Inc's dividend and valuation
Momo Inc, after all, the proportion of users, "wolves more meat less" that is, 70% of male users, accounting for the majority. The reason is that the female user experience is not so good. The acquisition of exploration has made up for the weakness of Momo Inc's female users, which can be described as an extremely wise step. Probing currently has a mau of 18 million, women occupy a dominant position among users, and explorations are beginning to make a profit. The prospect of integration with Momo Inc is worth looking forward to in the future.
(source: QuestMobile)
Momo Inc faces three major dividends, three major dividends: the decline of network fees, the opening of third and fourth line channels, and the broad masses of unmarried people.
At the 2018 government work conference, Premier Li Keqiang clearly defined the policy guidance of reducing and increasing mobile network fees and set a reduction of at least 30% this year. It can be foreseen that in the future, raising speed and reducing fees on the mobile side will be directly good for companies like Momo Inc who rely on the mobile side.
In addition, the sinking of the third and fourth lines is also an important dividend for Momo Inc's growth.We see that Weibo Corp today accounts for more than 80% of users in second-and third-tier cities, up from less than 50% a few years ago. In the final analysis, China still accounts for the vast majority of the population of second -, third-and fourth-tier cities, and as the post-85 netizens in these cities rise, their spending power is no worse than that of first-tier cities.
As a result, the upgrading of user consumption in third-and fourth-tier cities began to drive Momo Inc, Weibo Corp, Toutiao and Kuaishou Technology.The population of most third-and fourth-tier cities has plenty of time. They surf the Internet to kill time. Brushing Weibo Corp's new things, watching Momo Inc's live broadcast, flipping through all kinds of headlines, and so on, solved their pain points of killing time. These factors add up to fully show the logic of the outbreak of these major content traffic faucets.
One of the most important dividends is the unmarried bonus.According to the statistics of China Statistical Yearbook 2017, the total number of unmarried people in China was 218 million in 2016. together with 21.99 million divorced people, the number of single people in the country has reached 240 million.Men complain that women's debts are difficult to pay, desire industries always produce giants, buy to bring minced hands, play to bring Krypton, as the desire of men and women, the law of nature, to meet this demand, the market prospect is broad.
Conclusion: with 110 million mau, Momo Inc can be said to be in the leading position of strangers socializing in China. Under the condition of healthy earnings, most institutions now have profit expectations of $500 million to $600 million in 2018, so their dynamic PE is less than 20%. With other social companies in the US stock market generally PE30-40, there is still a lot of room for imagination in the future, backed by China, a big consumer market.
Because of the length, Momo Inc can not be explained thoroughly, but interested investors can take a closer look at Tang Yan, the soul of Momo Inc. The development of a company has too much to do with CEO, and this is not in the value investment system, which is the most worthy of analysis. For example, look at the comparison between the era of Apple Inc of Jobs and the era of Cook.
(author: Huaguang Charlie)