{ "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": 47, "pageCount": 70, "prevPage": 46, "nextPage": 48, "slideType": "executive_summary", "function": "summarize", "density": "dense", "nDataPoints": 2, "notes": "The slide uses a narrative structure to frame the company's history as a series of growth cycles followed by fatigue, leading to the current critique of its business model.", "elementsJson": [ "headline_text", "paragraph", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-72ad4dd9da96/47", "deckHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-72ad4dd9da96#slide-47", "components": [ { "bbox": null, "kind": "callout", "text": "Momo's growth during 2015 was impressive, albeit shy of 2016 levels, but the internals of membership subscription services, mobile games and mobile marketing (per monthly active user “MAU”) were all showing signs of fatigue in early 2016.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-14dd-72ca-b978-89f9e1b50978", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.9, "x": 0.05, "y": 0.71 }, "kind": "paragraph", "text": "By the 3rd quarter of 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 predominately driven by ARPPU growth. At this point in time there appeared to be a realization by Momo management that the Live Video business would have to evolve in order to avoid the fate of live gaming before it. Momo Live Video revenues were likely very concentrated (no longer disclosed) amongst a small subset of paying users and broadcasters. The gold rush of user generated content was fading as live streaming was maturing as a business and becoming more professional from a content perspective. This repositioning of Live Video isn’t playing to Momo’s strengths and also invites new competition from the likes of deep pocketed players like Tencent’s Now and the rapidly growing short video players.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "716331ec-d60c-4dcc-a0fb-0087708cca99", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.9, "x": 0.05, "y": 0.18 }, "kind": "paragraph", "text": "Momo (Nasdaq: MOMO or “the Company”) went public in late 2014 seeking to fill a void in the lives of lonely Chinese by serving as an anonymous location based social networking site. Early monetization of the site focused on a subscription (and later Super VIP) model where subscribers received additional functionality to facilitate making new connections. The first traffic monetization product revolved around the distribution of third party video games. Concurrent with the push in mobile games, Momo sought to monetize traffic through mobile marketing. The mobile marketing effort leaned originally on partnerships with the likes of Alibaba and 58.com and later self operated marketing services focused on Dao Dian Tang and app downloads.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "787983be-a91d-4c9e-80ac-fcedfb0c8882", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.39 }, "kind": "paragraph", "text": "Momo’s growth during 2015 was impressive, albeit shy of 2016 levels, but the internals of membership subscription services, mobile games and mobile marketing (per monthly active user “MAU”) were all showing signs of fatigue in early 2016. During this same period Momo’s reputation as a “hook-up site” was further being soiled by the fact that a number of crimes, particularly rape, were being reported in media outlets (sources below).", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7e593346-a707-4599-b793-665f2e613985", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.9, "x": 0.05, "y": 0.52 }, "kind": "paragraph", "text": "In Q1 2016 Momo introduced live streaming and was able to reestablish the growth trajectory of the Company. Momo shareholders would later benefit, to the tune of ~215% share price increase over the past two plus years, from the intersection of the J-Curve portion of China live stream adoption (particularly pertaining to user generated “UG” content) and the fact that Momo had an installed (largely male millennial) MAU base of 70 million at the time. Live Video revenues, paying users, Average Revenue Per Paying User “ARPPU” and conversion of MAU to Live Video paying users all exploded during 2016 and live streaming propelled Momo revenues to increase more than 3x.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f281d30c-5b75-4b40-960f-78db365c1ea5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.9, "x": 0.05, "y": 0.92 }, "kind": "source-note", "text": "Sources: mydrivers.com, Oeee.com, sina.com, dzrbs.com, sohu.com, Weibo.com, epaper.com, news.e23.cn, news.sun0769.com, sohu.com, law.southcn.com, nanrenwo.net, new.cnr.cn, hunan.sina.com.cn, games.ifeng.com, finance.gucheng.com, news.zdface.com, baijiahao.baidu.com, news.163.com, 0573ren.com, Jiangsu.china.com.cn, news.jstv.com, tech.163.com, 110.com, bbs.365jia.cn, mini.eastday.com, ah.sina.com.cn, ln.sina.com.cn, 66law.cn, fj.qq.com, finance.sina.com.cn", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "33596fd2-b8e3-4a70-a0e2-ebcb5fb55cf6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.4, "x": 0.305, "y": 0.06 }, "kind": "title", "text": "Quick History of The Momo You Know", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4778993a-38c9-44cf-acb7-80bace978760", "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": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }