Accelerating E-Commerce And AI Personalization Will Redefine Retail Experiences

Key Takeaways

• Strong GMV and revenue growth is expected, fueled by new merchants, broader assortment, success with younger users, and improved consumer confidence.
  
• Enhanced ad platform integration, AI-driven personalization, and private label expansion are set to drive higher margins, customer engagement, and overall profitability.
  
• Rising competition, weaker durable goods sales, elevated investment spending, and macroeconomic headwinds are straining margins and threaten momo.com's revenue growth and earnings stability.

Catalysts

Engages in the TV and radio production, radio and TV program distribution, radio and TV commercial, video program distribution, issuing of magazine, and retailing businesses in Taiwan.

• While analyst consensus expects strong GMV growth from momo.com's 3P business, the current momentum in onboarding new merchants, expanding SKU assortment toward two million, and a rapid shift in younger and male demographics suggest 3P GMV and revenue could significantly outpace expectations, driving a sharper acceleration in both topline and user growth as consumer confidence rebounds.
  
• Analysts broadly agree on momoAds' potential, but the platform's recent integration of on-site and off-site channels and early data on rising multichannel ROI indicate momoAds could capture a disproportionately larger share of brand budgets; this would translate into a meaningful uplift in overall profit margins given media's outsized contribution to earnings.
  
• momo.com's aggressive investment in expanding and automating distribution centers, alongside a growing in-house logistics fleet, positions the company to deliver industry-leading fulfillment speeds nationwide, transforming convenience and customer experience into higher share-of-wallet and increased gross merchandise value.
  
• The company's focus on AI-powered personalization and targeting is driving double-digit growth in monthly active users and purchase frequency, enabling momo.com to unlock steadily higher order values and boost revenue through deeper engagement and conversion.
  
• With private label and exclusive products gaining traction, momo.com is set to achieve structurally higher gross margins over time, as differentiated offerings reduce price competition and drive brand loyalty, directly supporting net profit and earnings growth.

momo.com Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on momo.com compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming momo.com's revenue will grow by 6.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 3.0% today to 3.1% in 3 years time.
• The bullish analysts expect earnings to reach NT$4.2 billion (and earnings per share of NT$19.08) by about July 2028, up from NT$3.4 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 31.5x on those 2028 earnings, up from 19.3x today. This future PE is greater than the current PE for the TW Multiline Retail industry at 18.9x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.01%, as per the Simply Wall St company report.

momo.com Future Earnings Per Share Growth

Risks

• Intensifying competition both from established local e-commerce rivals and emerging global players is resulting in persistent price competition, particularly in key categories such as diapers and household goods, which puts downward pressure on gross margins and could impact long-term profitability.
  
• There has been a decline in average ticket size due to a greater sales mix from lower-priced 3P products, combined with weaker demand for higher-margin durable goods, which may suppress top-line revenue growth even as user engagement and transaction volumes rise.
  
• Momo.com is heavily investing in logistics infrastructure and technology to maintain service standards and expand delivery capabilities, leading to sustained capital expenditures and higher operating costs that could compress net earnings for multiple years.
  
• Macroeconomic headwinds-including subdued consumer sentiment, persistent inflation, and economic uncertainty-have led to a pronounced slowdown in retail and e-commerce growth rates in Taiwan, which poses a long-term risk to revenue and earnings growth as market saturation approaches.
  
• Shifts in consumer trends, such as increased spending on experiences like overseas travel and less on discretionary retail categories, alongside a structural decline in traditional TV shopping and possible rise of alternative commerce channels, threaten to erode momo.com's customer order volume and may consequently reduce revenue and undermine earnings stability.

Valuation

• The assumed bullish price target for momo.com is NT$430.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of momo.com's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NT$430.0, and the most bearish reporting a price target of just NT$295.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be NT$135.7 billion, earnings will come to NT$4.2 billion, and it would be trading on a PE ratio of 31.5x, assuming you use a discount rate of 7.0%.
  
• Given the current share price of NT$260.0, the bullish analyst price target of NT$430.0 is 39.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.