"China is leading the world in live streaming – where individuals broadcast themselves singing, chatting or even eating," equity research analyst Fan Liu and a team of other analysts said in a Thursday report.
The analysts forecast the livestreaming market to grow to $15 billion in 2020, more than seven times what it was just two years ago, and are initiating buy on the two leaders of the market "after a flurry of startups in the space last year."
Messaging app Momo has a strong existing social network, while YY has "solid content generation capability," the analysts said.
Shares of Momo closed nearly 7 percent higher Thursday at $38.53 a share, leaving about 45 percent upside to Goldman's $56 12-month price target. Shares of YY gained 5 percent to $74.72, about 35 percent below the analysts' $101 price target.
Livestreaming enjoyed the highest revenue per hour in 2016 (US $)
Source: Goldman Sachs
Momo reached a record 91.3 million monthly active users in the second quarter, according to the Goldman report, while YY had 66 monthly active users for mobile livestreaming and 5.7 million paying users in the second quarter.
To be sure, both stocks tend to be volatile and are based on business models sensitive to consumer sentiment.
The Goldman analysts also noted pressure from Chinese regulators could also quickly turn sentiment around.