This earnings season has ended for almost all social media public companies and was one of the most noticeable disappointments this quarter for the overall market. In particular, all four of the largest social media companies have tumbled. Some analysts claimed that the selloff of social media stocks was exaggerated, and a quick rebound will happen any day, but for the most part they were wrong. The strength of the stock indexes, which are trading near all times high, didn’t help either.
Twitter (NYSE: TWTR) fell about 20%, LinkedIn Corp (NYSE: LNKD) plummeted by more than 23%, Yelp Inc (NYSE: YELP) crushed by approximately 30%. Facebook (NASDAQ: FB), the strongest company and slowest mover of the bunch, declined in value by only 2% on April 23rd, a day after the earnings were reported. Facebook continued its bearish momentum until May 12th and by the end falling more than 8% overall. Facebook has the advantage of clever monetization including new lines of income, like video advertising, which makes the company more tolerable for missteps. The one stock out of the four that rebounded almost completely back to its pre earnings trading levels is YELP, and that is only after the company announced that they are looking for a buyer. It had nothing to do with performance.
The problems with Wall Street’s favorite internet stocks are slowdown in user growth, in local advertising contracts, and weakening subscribing base, depending on the business model of the company. These problems resulted in slower projections for the rest of the year, which is what the stocks were punished for. The reason for this all is rather simple; the primary ways social media companies make money are becoming less practical as consumer habits are rapidly changing. Google (NASDAQ: GOOG) reported recently that mobile searches way exceeded desktop searches for the first time in the United States and in nine other countries as well. With the exception of Facebook, none of the other social media companies figured out how to leverage the new mobile habits of the current internet junkie.
Small companies who started building platforms for the mobile market as a default might be a head of the game. There are small cap companies that are trying to enter the global social media market in different creative ways. Moko Social Media Ltd (NASDAQ: MOKO) for example, is approaching the business differently than any other company. Generally speaking, companies create a website and then try to attract a large audience to monetize the site. Moko decided to first find the audience, analyze the demographic needs, while creating efficient ways to communicate with one another, and ultimately building a social media platform specifically for that particular community. Moko monetizes its apps from sponsorships, content syndication, social network distribution, advertising and other monetization of the app based platforms.
Moko Social Media is describing itself as a platform publishing company that is at the forefront of the next generation in social media with 90% engagement through mobile devices. The Australian based company is targeting communities of students, political supporters, active lifestyle participants and millennial women. For each audience, Moko has designed a tailored app (some more popular than others) with total Monthly Unique Visitors (MUV) of 8.1 million.
|Audience||App||MUV as of 31 March|
|Active Lifestyles||RunHaven||1.2 million|
|Millennial Women||Tagroom||3 million|
This is far away from being compared to Facebook, but it’s important to notice that MOKO’s user base and social reach continue to grow at a very impressive rate as MUVs have increased by 60% since December 2014. Moko also has attracted a number of large companies to advertise on their apps, especially on their most popular ones, BNR and Tagroom. Among the list of clients there are names like Canon (NYSE: CAJ), Intel (NASDAQ: INTC), Corona Extra, The Rolling Stones Magazine, Bulleit Bourbon Whisky and more.
Moko is a very young social media company, but their technology and platforms have a proven concept. Now judging by the impressive Monthly Unique Visitors growth during the company’s most recent quarter, Moko might have just solved the problem that other Social Media companies are facing, or is it too soon to tell? Stay tuned for additional coverage.