Momo Inc is a fast growing Chinese social network that started off as a dating network and now focusses on live video streaming.
With annual growth of 50% forecast for the next 5 years and a 2017 forward PE of c.26 it looks cheap. This valuation largely reflects market concerns about Chinese risk, namely govt regulations and potential fraud. However both these issues have major mitigating factors.
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On govt regulations, a recent article in Fool.com outlines how Momo has turned the regulatory regime into an opportunity. Momo is ahead of competitors on implementing new rules and its leading position mean it is well placed to benefit from industry consolidation. http://ift.tt/2uak1dq
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Regarding potential fraud, I take comfort that Momo has a market cap of over $8.3bn, its CEO Yan Tang was named by Fortune magazine as one of the most influential and important business elites under the age of 40, that insiders hold almost 30% of the stock and that Alibaba holds almost 6%.
Dont get me wrong, there is risk here. But on the current valuation the risk/reward looks attractive.
This is not a recommendation to buy or sell. Stocks are not suitable for all investors. Please do your own research.
Submitted July 21, 2017 at 01:52AM by InterestingNews1 http://ift.tt/2vHblcn
