Shares of Momo Inc. (MOMO - Free Report) soared more than 12% in morning trading Friday after the Chinese instant messaging company acquired Tantan, China’s top dating application, in an all-cash deal valued at more than $600 million.
Such a major deal clearly signals that Momo is looking to diversify its core business in an effort to compete against Tencent’s (TCEHY - Free Report) WeChat, the clear leader in China’s instant messaging market.
“Our core position will continue to center on social networking and this acquisition enriches our product line in the social space,” said Momo CEO Yan Tang. “After the acquisition, the Tantan team will continue to operate the mobile apps under the Tantan brand with our full support.”
Labelled as the “Tinder of China,” Tantan claims to have created 5 billion matches since launching in 2015. The app never disclosed its private valuation, although we do know that it has raised about $120 million—including $70 million in a funding round as recently as last year.
For Tantan, the deal presents the young company with a unique opportunity to scale while still operating under its own banner.
“The acquisition is a critical strategic upgrade to cover a greater range of user demographics and needs, and build up a larger social networking market through complementary businesses and strategic synergy. We are very confident in our future development,” said Tantan CEO Yu Wang.
Momo shares opened higher and continued to climb in morning trading Friday, reaching an intraday high of $34.50 shortly after the opening of the U.S. markets. The stock is now up nearly 35% over the past year, although it is still a long way off the 52-week high it reached in August.
Momo’s failure to generate much momentum actually presents a unique value opportunity in the Chinese internet space. While many of its peers—including Line Corporation and Weibo Corporation (WB - Free Report) —trade with sky-high valuations, Momo is currently sporting a P/E of just 13.9.
But Momo is still a stock with explosive growth potential. Our consensus estimates are calling for the company to conclude its fiscal 2017 with full-year earnings growth of 97.7%, followed up by an additional bottom-line expansion of 28.2% in the upcoming fiscal year.
Momo is currently sporting a Zacks Rank #3 (Hold), as well as an “A” grade for Growth in our Style Scores system.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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Shares of Momo Inc. (MOMO - Free Report) soared more than 12% in morning trading Friday after the Chinese instant messaging company acquired Tantan, China’s top dating application, in an all-cash deal valued at more than $600 million.
Such a major deal clearly signals that Momo is looking to diversify its core business in an effort to compete against Tencent’s (TCEHY - Free Report) WeChat, the clear leader in China’s instant messaging market.
“Our core position will continue to center on social networking and this acquisition enriches our product line in the social space,” said Momo CEO Yan Tang. “After the acquisition, the Tantan team will continue to operate the mobile apps under the Tantan brand with our full support.”
Labelled as the “Tinder of China,” Tantan claims to have created 5 billion matches since launching in 2015. The app never disclosed its private valuation, although we do know that it has raised about $120 million—including $70 million in a funding round as recently as last year.
For Tantan, the deal presents the young company with a unique opportunity to scale while still operating under its own banner.
“The acquisition is a critical strategic upgrade to cover a greater range of user demographics and needs, and build up a larger social networking market through complementary businesses and strategic synergy. We are very confident in our future development,” said Tantan CEO Yu Wang.
Momo shares opened higher and continued to climb in morning trading Friday, reaching an intraday high of $34.50 shortly after the opening of the U.S. markets. The stock is now up nearly 35% over the past year, although it is still a long way off the 52-week high it reached in August.
Momo’s failure to generate much momentum actually presents a unique value opportunity in the Chinese internet space. While many of its peers—including Line Corporation and Weibo Corporation (WB - Free Report) —trade with sky-high valuations, Momo is currently sporting a P/E of just 13.9.
But Momo is still a stock with explosive growth potential. Our consensus estimates are calling for the company to conclude its fiscal 2017 with full-year earnings growth of 97.7%, followed up by an additional bottom-line expansion of 28.2% in the upcoming fiscal year.
Momo is currently sporting a Zacks Rank #3 (Hold), as well as an “A” grade for Growth in our Style Scores system.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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