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Long

Confusing Head&Shoulders pattern for MOMO and 50% gain potential

NASDAQ:MOMO   MOMO INC
In current context it is very hard to make prediction and especially in Chinese stocks. MOMO has recently completed H&S pattern which is usually regarded as bearish chart pattern. Stock is very volatile last 3 weeks and it drops to its strong support at around 22-23. Situation with COVID-19 fuels uncertainty and fear into global markets sentiment and can push MOMO even lower at this setup. MOMO has very good and stable growth and people in China like using dating and video services provided by company. I would even think current context may increase usage of those services. COVID-19 seems to be currently more-less stabilised in China, not in the rest of the world however.

Most important day for MOMO is 19.march 2020 when Q4 and full year earnings will be announced. EPS Q4 forecast is 0.64$ which is roughly 40% higher in comparison to Q4 2019 EPS . I believe in strong results which may be able to yield 50% gain in price from 22$ to 33$ in few months.
Comment: Good results and special divident will help stock to slowly rise.


Quarterly Results beated expectations
Earnings per share increased 15.25% year over year to $0.68
Revenue of $673,374,000 rose by 20.44% year over year

Q1 2020 expectations
Q1 revenue expected between $483,000,000 and $497,000,000 which is decrease of 7.3% to 4.6% year over year. This expectation is current view on impact of COVID-19 and may be subject of change

Guidance
Momo hasn't issued any earnings guidance for the time being.

Special dividend!
Special cash dividend in the amount of US$0.76 per ADS, or US$0.38 per ordinary share. The cash dividend will be paid on April 30, 2020 to shareholders of record at the close of business on April 8, 2020. The ex-dividend date will be April 7, 2020.


Sources:
- https://www.prnewswire.com/news-releases...
- https://finance.yahoo.com/news/momo-q4-e...

Comments

Potential of MOMO is massive. As the the Chinese Corona virus gets contained healthy people can carefully go out, so the dating will pick-up.
+1 Reply
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