Analysts seem to agree that there more gains to come from holding Momo Inc. (NASDAQ:MOMO) stock. However, the stock is in a decline that amounts to -0.9% since January this year.
Interestingly, analysts peg the 12-month price target for Momo at $47.53. However, the market seems to disagree. In particular, the stock price for the company was about $24.58during the last 24-hour trading period.
Analysts keep the Momo Inc sentiment positive
Although there are slight upwards movements in the stock price, it is still uncertain if the stock will gain much. Nonetheless, analysts expect more significant gains for a firm whose 50-day moving average stands at $33.32.
Interestingly, other analysts estimate that the lowest price target for the next 12 months of $30. This is to say that they do not expect the price to sink below that value on average.
Clearly, the MA (200) pegs the price resistance at 39.58. Further, the overall trend of the moving average is positive. This implies that the analysts could see the stock price meet or even surpass their expectations.
However, the firm’s shares are down more than half of the highs attained in mid-2018. Even with the positive sentiments from the analysts, investors seem unconvinced by the most recent earnings report.
Notably, the earnings report was below what most investors expected. Further, the guidance for the fourth quarter failed to beat what investors expected. As such, investors seem to sell off the stock in what might merely be spooked behavior.
The stock oversold and less volatile
Interestingly, the relative strength index (RSI) for the stock is 31.23. As such, it is clear that the stock growth strength is meager. Further, this is an indication of an oversold situation for the stock. Further, this indicates that the stock could pick up soon.
Additionally, the Williams Percent Range (Williams %R) reading for the share price supports the RSI conclusion. In particular, the Williams %R stands at -94.56. As such, the stock stands highly oversold. What this means is that investors could get a very high return if they bought into the stock at the moment.
However, the average true range (ATR) indicates a small amount of volatility for the share price. In particular, the ATR stands at 2.109, an indication that the stock is less likely to change direction drastically.
A developing downtrend
Nonetheless, the bears seem to overwhelm the activity surrounding the share price. Particularly, the stock already breached the critical support level. As such, short sellers could utilize the opportunity to make a killing, further dampening the stock price. Besides, the price dampening could further embolden a downtrend that threatens the value of the company’s stock.
However, the Q3 financial results indicate a 51% year over year growth. The firm sees this is testimony that the coming quarters will show better numbers.
Further, the firm cites the surge in net income as another reason investors should be patient with the stock. In the same quarter last year, Momo Inc reported $79.1 million as the net income attributed to shareholders. However, the recent earnings results indicate a surge to $85.2 million.
According to Yan Tang, CEO of Momo, the company has a solid strategy for long-term growth.
“I am pleased that we delivered solid operational and financial results for the quarter. At the same time we continued to push forward on product and operational fronts, to build up long-term growth drivers as we start to look beyond 2018 into next year,” Tang said.
In addition, the firm reports an increased number of active users. As such, the company’s bottom line is growing impressively. Active users are the segment responsible for the bulk of the revenue the company makes.
Also, Momo’s live video service experienced a higher number of users during the quarter. As such, revenue will continue to experience surges as long as the user numbers keep rising.