Why Shares of Momo Jumped Today

What happened

Shares of social networking company Momo (NASDAQ: MOMO) jumped on Wednesday, yet there was no news driving the stock higher. With the major stock indices up more than 1% each at 3:40 p.m. EST, Momo's surge may just be the result of the broad stock rally. Shares of Momo were up 12% at 3:40 p.m. EST.

So what

We last heard from Momo when it reported its third-quarter results back on Nov. 28. The company produced year-over-year revenue growth of 126%, beating analyst estimates for both revenue and earnings. Momo stock tanked despite the positive results, extending a decline that had begun a few months earlier.

Wednesday's gain undoes some of that decline, but the stock is still below where it was prior to the third-quarter report, and it remains about 39% below its 52-week high.

Now what

Momo will report its fourth-quarter results in early March, based on the company's reporting schedule from previous years. Analysts expect revenue to grow by 54% year over year, with adjusted earnings per share rising only slightly to $0.47. With the stock surging for no apparent reason on Wednesday, investors should brace for more volatility.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Momo. The Motley Fool has a disclosure policy.