{ "docId": "019dd923-622c-750b-8b98-72ad4dd9da96", "docSlug": "86dfa89096f8", "documentTitle": "Momo, Inc. (MOMO)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2018-06-27 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 13, "pageCount": 70, "prevPage": 12, "nextPage": 14, "slideType": "problem_statement", "function": "diagnose_problem", "density": "overcrowded", "nDataPoints": 3, "notes": "The slide uses a series of bulleted arguments to build a case for business deterioration, culminating in a mention of regulatory/legal issues.", "elementsJson": [ "headline_text", "bullet_list" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-72ad4dd9da96/13", "deckHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96#slide-13", "components": [ { "bbox": null, "kind": "callout", "text": "Momo's financial performance is inextricably tied to live streaming, a business with low barriers to entry and coming under intense competition from well funded adversaries", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-14dd-72ca-b975-fc6fde454d33", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.62 }, "kind": "list", "text": "Management explained on the Q2'17 earnings call it was in the best interest of the Company to transition certain live streaming users towards other use cases even if it meant \"divert traffic from our very monetizable live streaming service to more newer used cases.\" The justification for such a shift, \"I think the key thing here is that we've never been positioning Momo as a live streaming company\"", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "050ff5c4-ad35-42bf-945a-42ca5ae4c6d8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.17 }, "kind": "list", "text": "Momo Has a Demonstrated Track Record of Product Applications Plateauing Over Time", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2757c347-aa2e-4a48-84d3-80ca479654b1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.48 }, "kind": "list", "text": "Management's Commentary And Financial Results in Q2 and Q3 2017 Indicated Concern About The Live Video Segment And Prompted A Shift In Strategy Towards Agencies", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "30407d91-3c14-4111-98f2-c4b427a97be7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.53 }, "kind": "list", "text": "By the Q3'2017, the Live Video segment was beginning to show signs of fatigue as paying users flattened out and conversion of MAU to paying users was in decline. The revenues of Live Video continued to post strong growth, but this was almost exclusively driven by ARPPU growth", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4cfb4c11-f908-4874-b098-6a030ecfb969", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.33 }, "kind": "list", "text": "Despite Management's Wishes Otherwise, Momo Remains A Live Video Company", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a69cc4c5-e673-4b2e-ab08-5c75f78b9b33", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.86 }, "kind": "list", "text": "We remind all investors that these business changes occurred precisely around the time the SAIC charged Momo with \"Filing corporate information with the intent to conceal the truth and falsify\", three Momo directors resigned and new Tantan LP entities were created", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bc3a4bf8-66f1-4794-9326-7996b9b3b6c8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.73 }, "kind": "list", "text": "On the Q3'17 earnings call, Momo acknowledged new competition and industry maturation. \"At the same time, we are seeing bigger players with strong community ecosystems taking initiatives to upgrade their content offerings and market-share shifting from amateur broadcasters to more professional ones\". As well as a strategic shift towards working with agencies, \"Historically, agencies have a limited role in Momo's life streaming ecosystem\", including \"adjusting our operational policies to better support the high value-added agencies in traffic and other resources, as well as economic incentive\"", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c56e0aa9-8c46-41fa-aab4-46c23cc19e0c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.22 }, "kind": "paragraph", "text": "Momo's revenue growth story has been predicated on growth of monthly active users (MAU) and more importantly Average Revenue Per Paying User (ARPPU). However, the performance of Momo's underlying products (Membership Subscriptions, Gaming, Marketing and Live Video) along with key performance indicators (revenues, paid users, revenue/MAU and paid users, respectively) have all plateaued over time", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "53f6050f-f67d-4074-8c89-6459db5b7149", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.38 }, "kind": "paragraph", "text": "As of Q1'18, 85% of Momo's revenue was attributable to Live Video and Live Video's ARPPU was ~12x that of Value-Added Services \"VAS\" ($84 vs $7m). Momo's financial performance is inextricably tied to live streaming, a business with low barriers to entry and coming under intense competition from well funded adversaries", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "802e8a47-a751-48e2-bffa-461ca0c39213", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"I think the key thing here is that we've never been positioning Momo as a live streaming company\" — Management, Q2'17 earnings call. \"At the same time, we are seeing bigger players with strong community ecosystems taking initiatives to upgrade their content offerings and market-share shifting from amateur broadcasters to more professional ones\" — Management, Q3'17 earnings call. \"adjusting our operational policies to better support the high value-added agencies in traffic and other resources, as well as economic incentive\" — Management, Q3'17 earnings call. \"Filing corporate information with the intent to conceal the truth and falsify\" — SAIC charge against Momo.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-14dd-72ca-b976-015a6a02c549", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.28, "y": 0.05 }, "kind": "title", "text": "Fundamental Challenges On The Horizon For Momo's Live Video Segment", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5c09a566-d227-4a16-8059-254cfe3cb107", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 69, "from": 7, "beatId": "2ed90acb-05ba-4602-8daa-c17fe790841b", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "Slides 7-69 systematically expose contradictions and red flags in Momo's business, including undisclosed charges, complex VIE structure, and regulatory risks.", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 15, "from": 7, "name": "Aha Moment", "slug": "03-aha-moment", "bestFor": "Data-heavy sections, research findings, analytical arguments", "matchId": "e80fc9fe-eee3-4c63-9ecb-b5238ed599c0", "evidence": "Slides 7-15 reveal several red flags and concerns, creating an 'aha' moment for the audience.", "position": 0, "objective": "What are the key concerns with Momo's business?", "structure": "The Problem/Question -> What the Data Shows -> The Insight", "confidence": 0.8, "description": "Establish a tension, present data, then deliver the insight that changes everything" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }