What’s on the horizon for Point72? It appears Cohen has his eyes on a strategic expansion in Asia. Not only has Point72 opened larger offices in Singapore and Tokyo, but the firm likewise expanded its Hong Kong office. Consider that three years ago, Point72’s office location in Hong Kong could hold roughly 60 employees. Present-day, mid-savvy Asia expansion, this capacity now soars over 160 employees.
Cohen is hard at work at a comeback. The mogul’s former firm SAC Capital Advisors fell to securities fraud scandal- and a ban from trading outside money for a rocky two years. Cohen had to fork over a $1.8 billion fine- but by January 1, the ban was over.
In the second quarter, Cohen’s Point72 appears to have taken a bearish turn on Chinese e-commerce king Alibaba (BABA): Point72 cut its position here nearly in half. Yet, for Momo (MOMO), it’s a far more bullish tale. The ‘Tinder of China’ (a free social search and instant messaging mobile app) has hooked Cohen’s attention, with Point72 boosting its stake a whopping 583%.
Let’s dive right into Cohen’s Q2 plays in China’s key stock giants:
Alibaba Gets Dumped
In the latest quarter, it appears Cohen sees reason to backtrack on BABA. Cohen shed 800,477 shares from his hedge fund firm’s stake in BABA- a sharp 48% chop. This now takes Point 72’s holding to 891,791 shares worth $165,454,000.
One of Wall Street’s top analysts is sticking tight to the BABA bulls, angling for upside ahead. 
RBC Capital’s Mark Mahaney (Track Record & Recommendations) reiterates an Outperform rating on BABA stock on September 14. Setting a $215 price target, the analyst spotlights nearly 34% in upside potential for Alibaba shares.
Notably, out of over 4,800 analysts, Mahaney’s track record of betting on BABA has paid off- he earns an average of 45% in profits on the stock. And right now he is on his way to BABA’s all-important Investor Day from Sep 17-19, in Hangzhou, China.
“While we do not expect any change in annual guidance (+60% Y/Y Revenues FY19), we believe management will use the event as an opportunity to showcase BABA’s New Retail initiatives, as well as potential synergies… and LT margin profiles of BABA’s recent investments. We also anticipate updates on AliCloud’s marketshare & TAM, as well as updates on Ant Financial.” writes Mahaney.
Plus he will be listening out for any further updates on the transition of CEO Jack Ma (to be replaced by Daniel Zhang in September 2019). Will there be further leadership or near-term strategy changes, asks Mahaney. He remains confident that BABA’s consistent, robust growth rates are indicative of the platform’s strength and scale as brands/merchants ramp advertise spending.
According to TipRanks, Alibaba is a Wall Street favorite. The ‘Strong Buy’ stock has racked up 16 bullish recommendations from analysts over the last three months. Consider that the 12-month average price target of $237 reflects high confidence. The Street is calling for another almost 44% in room for BABA shares to run.
Dialing Up Momo
Momo saw Cohen’s Point72 getting upbeat in the second quarter. The hedge fund firm added 404,200 shares to its stake in the ‘Tinder of China;’ quite a bullish play. Now, Cohen’s firm holds 473,600 shares worth $20,602,000- meaning the bulk of Poin72’s holding in Momo was purchased in the latest quarter.
UBS analyst Jerry Liu (Track Record & Recommendations) cheekily poses a question in his recent bullish research note: “Can dating become a significant growth driver?”
The analyst sees a “significant long-term opportunity in China for dating apps targeted at millennials and younger users.” Momo’s recent acquisition of China’s top dating application Tantan could stand to yield 13% of revenue dollar growth in two years, wagers Liu. This translates to a $132 million yearly revenue opportunity for Tantan from 49 million monthly active users- and is “achievable between the next 2-3 years.”
Liu crunches the numbers based on: “Tinder’s growth and penetration of the single and unmarried population in the US, and layering in China’s more favorable market dynamics, including higher uptake of Internet services and the lack of a bar/restaurant scene for dating.”
In fact, the analyst believes Momo could generate even higher dating revenue upside to $456 to $539 million. One, the Chinese tech giant stands to bolster a portfolio of apps to reach out to varying demographics- and provide “different user experiences.”
Next, Momo’s acquisition of Tantan could hike average revenue per subscriber along with paying user conversion. After all, Tinder’s average revenue per subscriber rocketed 60% between 2016 and 2018. With certain dating apps in China exhibiting stronger conversion than rival Tinder, this indicates to Liu a “higher propensity to pay.”
Liu’s recommendation on MOMO valuation: “Buy on long-term growth in Tantan and overall ARPU.” Indeed, the analyst rates a Buy on MOMO stock with a $60 price target. This suggests nearly 27% in upside potential from current levels.
Ultimately, “While some investors are focused on the near-term product cycle and relative value to YY, we see a more long-term story in Tantan supported by live streaming and VAS ARPU upside… Both are close to the high-end of Momo’s recent range, which we believe is warranted given the long-term upside. Our estimates are 12% and 15% above consensus for 2019 and 2020,” concludes the analyst.
Street-wide sentiment circling MOMO stock shines positive. TipRanks market data reveals the stock has received only buy ratings in the last eight months. See what other Top Analysts are saying about MOMO.
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