Momo Inc. (MOMO) rations moved sharply lower on Tuesday after the market was disappointed with the public limited company’s third quarter financial results. Revenue rose 125.7% to $15.16 million – course consensus estimates by $15.16 million – and net income of 45 cents per pay out beat consensus estimates by seven cents per share. Despite these energetic numbers, the report appeared to disappoint many investors, and the stock has moved sundry than 20% lower since the beginning of the week.
Most of the third quarter achieves came from growth in Momo’s live video service, which expanded 179% to $302.6 million. In contrast, mobile marketing fell 1.4% to $17.4 million, unstationary games fell 13.6% to $8 million, and other services floor from $3.4 million to just $129,000. The positive news for the assemblage is that monthly active users rose to 94.4 million from 77.4 million, while disperse users of live video reached 4.1 million alongside improves in average revenue per paying user. (See also: Why Shares of China’s Momo Are on a Fissure.)
From a technical standpoint, the stock broke down from fulcrum point support at $31.28 to lower trendline support at around $26.00. The corresponding to strength index (RSI) moved closer to oversold levels at 33.25, but the affecting average convergence divergence (MACD) experienced a bearish crossover that could signal downside forwards. Traders should maintain a neutral to bearish bias on the stock throughout the near term given the extended downtrend.
Traders should wrist-watch for a rebound from trendline support at around $26.00 to trendline guerilla movement at around $30.00. If the stock breaks down from these buttress levels, traders should watch for a move to S2 support levels at $23.94. The timid rebound during Wednesday’s session suggests that the stock may be consolidating at its ongoing levels and forming a base before potentially moving higher fact the oversold RSI levels. (For more, see: This China ETF Is On Fire.)
Chart courtliness of StockCharts.com. The author holds no position in the stock(s) mentioned except under the aegis passively managed index funds.