Moko Social Media (ASX:MKB, NASDAQ:MOKO) shares overnight after analysts at Northland Capital Markets initiated coverage on the mobile app company with an outperform rating and a price target that is almost double its current value, citing the highly-tailored nature of Moko's business strategy.
The company, which was founded in 2004 and initially started in Australia, targets micro-social communities through its mobile applications, of which it expects to have launched six by January.
These micro-social communities are the evolution of the social network, wrote Northland analyst Darren Aftahi in his research report released Tuesday.
While Facebook, Twitter and Google Plus account for $2.1 billion plus of global social networking users, they are limited in scope in terms of addressing large sub-segmented social communities that share a common interest with the need to communicate with each other, he said.
Moko, meanwhile, looks to address this issue by targeting these large sub-segmented communities in a "highly-tailored fashion", first by controlling the only mobile conduit to the information that these specific social communities need, and second, by entering into exclusive arrangements with vertical partner groups and governing bodies.
"We have already seen some examples of highly targeted social networks start to blossom such as privately-held Strava (a free/subscription-based service focused on the cycling and running verticals), as well as privately-held Stocktwits, a financial communications platform for the financial and investing community."
Moko's first six mobile apps cover the collegiate, political and sports verticals, with an estimated total addressable market (TAM) of approximately 180 million users, noted Aftahi.
This figure can be even higher when figuring potential "instances", said the analyst.
"Because a unique user can represent multiple ‘instances’ (e.g. a college student can also be a runner, while simultaneously being interested in progressive politics), we believe ‘instances’ is the best way to measure MOKO’s TAM, which we estimate at ~300M+," he wrote.
This is an important distinction as instances ultimately are a truer representation of impressions, which ultimately drive ad revenue.
Moko is still in the early stages of its mobile apps launch strategy, and Northland's Aftahi says its biggest challenge will be aggregating users. The company has just launched its first two mobile apps, called REC*IT and BNR, with plans for another four to be live by January.
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