Hello Group (MOMO) AI Stock Analysis

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Hello Group

(NASDAQ:MOMO)

Rating:65Neutral

Price Target:

$6.50

▲( 6.91% Upside)

The overall stock score of 65.2 reflects financial and operational challenges, with a notable decline in core app revenues. However, the valuation indicates potential upside, and strategic focus on international expansion and profitability could drive future growth.

Positive Factors

Financial Strategy

The company has announced a $50M special cash dividend per ADS and upsized its share repurchase programs by $200M.

Overseas Expansion

The company's investment in new apps like Yaahlan and Amar in the Middle East, along with the ongoing growth of Soulchill, is seen as a key growth driver for future positive revenue.

Revenue Growth

The stabilization of the core Momo app and strong momentum from overseas apps are expected to drive a fundamental turnaround and positive revenue growth for Hello Group Inc. (MOMO) in FY25 and beyond.

Negative Factors

App Performance

Tantan remains a weak spot, with operations being trimmed to maintain profitability.

Profitability Challenges

Investments and operating deleverage may pressure margins, with profitability expected to bottom out in FY25.

User Growth

Tantan remains a weak spot, with challenges in generating a positive growth loop, leading to reduced investment and focus on organic growth, which may put pressure on user growth and revenue in the near future.

Hello Group (MOMO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$997.68M

Dividend YieldN/A

Average Volume (3M)908.66K

Price to Earnings (P/E)7.8

Beta (1Y)0.55

Revenue Growth-13.37%

EPS Growth-44.13%

CountryUS

Employees1,390

SectorCommunication Services

Sector Strength89

IndustryInternet Content & Information

Share Statistics

EPS (TTM)0.07

Shares Outstanding120,487,236

10 Day Avg. Volume659,179

30 Day Avg. Volume908,656

Financial Highlights & Ratios

PEG Ratio-0.40

Price to Book (P/B)0.67

Price to Sales (P/S)0.00

P/FCF Ratio5.13

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$13.00

Price Target Upside113.82% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Hello Group Business Overview & Revenue Model

Company DescriptionHello Group Inc. provides mobile-based social and entertainment services in the People's Republic of China. It operates Momo platform that includes its Momo mobile application, as well as various related properties, features, functionalities, tools, and services. The company's Momo mobile application connects people and facilitates interactions based on location and interests; and various recreational activities, including live talent shows, short videos, and social games, as well as other video- and audio-based interactive experiences, such as online parties, mobile karaoke, and user participated reality shows. It also operates Tantan, a social and dating application, which enables users to find and establish romantic connections, and meet interesting people; and provides live video, quick chat, value-added, mobile marketing, and other services, as well as mobile games and audio chatrooms. In addition, it allows its platform's users to livestream a variety of content and activities that comprise talent shows, such as singing, dancing, and talk shows, as well as casual chatting, and other forms of interactions between broadcasters and viewers. The company was formerly known as Momo Inc. and changed its name to Hello Group Inc. in August 2021. Hello Group Inc. was incorporated in 2011 and is headquartered in Beijing, the People's Republic of China.

How the Company Makes MoneyHello Group generates revenue primarily through value-added services, including membership subscriptions and virtual gift sales. The company offers premium memberships that provide users with enhanced features and functionalities within its applications. Additionally, Hello Group capitalizes on its live video streaming services by enabling users to purchase virtual gifts, which can be sent to content creators during broadcasts. Beyond value-added services, the company earns revenue from advertising, where businesses pay to reach the platform's large user base. Key partnerships with payment services and media companies also contribute to its earnings by facilitating transactions and expanding content offerings.

Hello Group Financial Statement Overview

Summary

Hello Group's financial performance reflects challenges in revenue and profitability within a dynamic industry environment. The income statement shows declining revenues and volatile net profit margins. However, the balance sheet remains stable with manageable leverage, and cash flow management indicates operational resilience, though free cash flow stability needs improvement.

Income Statement

Neutral

The company has experienced a declining revenue trend over the past few years. The gross profit margin remains moderate, indicating some efficiency in cost management. However, the net profit margin has been volatile, with significant fluctuations in net income. The EBIT and EBITDA margins show a decline, reflecting challenges in maintaining operational profitability.

Balance Sheet

Positive

Hello Group maintains a reasonable debt-to-equity ratio, suggesting a balanced approach to leveraging. The equity ratio indicates a good level of financial stability. However, the return on equity has been inconsistent due to varying net income levels. The company has managed to keep its liabilities in check relative to its assets.

Cash Flow

Positive

The cash flow situation shows a mixed picture. Operating cash flow relative to net income has been positive, indicating effective cash generation from operations. However, the free cash flow has seen fluctuations, affecting the company's ability to consistently fund operations and growth initiatives without external financing.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
10.56B	12.00B	12.70B	14.58B	15.02B
	Gross Profit
4.12B	4.98B	5.28B	6.19B	7.05B
	EBIT
1.53B	2.31B	1.63B	2.38B	2.53B
	EBITDA
1.59B	2.79B	1.74B	175.95M	2.90B
	Net Income Common Stockholders
1.04B	1.96B	1.48B	-2.92B	2.10B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
6.15B	6.89B	10.62B	8.43B	10.93B
	Total Assets
18.38B	16.23B	15.83B	18.11B	23.22B
	Total Debt
4.58B	2.29B	2.77B	4.83B	4.93B
	Net Debt
458.53M	-3.33B	-2.25B	-739.22M	1.56B
	Total Liabilities
6.95B	4.24B	4.90B	7.53B	8.39B
	Stockholders Equity
11.43B	11.80B	10.93B	10.59B	14.84B
Cash Flow		Free Cash Flow
1.35B	1.70B	1.15B	1.46B	2.96B
	Operating Cash Flow
1.64B	2.28B	1.23B	1.56B	3.08B
	Investing Cash Flow
-558.89M	2.41B	1.72B	2.55B	-748.47M
	Financing Cash Flow
236.20M	-1.70B	-3.43B	-1.79B	-1.50B

Hello Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price6.08

Price Trends

50DMA

5.92

Positive

100DMA

6.46

Negative

200DMA

6.52

Negative

Market Momentum

MACD

0.08

Negative

RSI

52.47

Neutral

STOCH

15.09

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MOMO, the sentiment is Negative. The current price of 6.08 is above the 20-day moving average (MA) of 6.04, above the 50-day MA of 5.92, and below the 200-day MA of 6.52, indicating a neutral trend. The MACD of 0.08 indicates Negative momentum. The RSI at 52.47 is Neutral, neither overbought nor oversold. The STOCH value of 15.09 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MOMO.

Hello Group Risk Analysis

Hello Group disclosed 73 risk factors in its most recent earnings report. Hello Group reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Hello Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TME	78 Outperform	$25.58B	20.46	14.37%	1.00%	4.59%	83.27%
YELP	77 Outperform	$2.39B	17.99	19.74%	―	5.93%	29.17%
WB	73 Outperform	$2.28B	6.93	10.79%	8.54%	0.83%	22.06%
MOMO	65 Neutral	$997.68M	7.76	9.01%	―	-13.37%	-44.13%
Sector *	60 Neutral	$14.12B	6.43	-3.56%	3.69%	2.49%	-35.43%
JOYY	55 Neutral	$2.27B	―	-2.96%	2.12%	-1.33%	-148.56%
NBIS	47 Neutral	$9.19B	189.78	-10.51%	―	-98.74%	-128.03%

* Communication Services Sector Average

Performance Comparison

MOMO

Hello Group

6.08

1.49

32.46%

NBIS

Nebius Group

38.59

19.65

103.75%

YELP

Yelp

37.40

1.09

3.00%

JOYY

43.64

11.74

36.80%

Weibo

9.37

1.39

17.42%

TME

Tencent Music Entertainment Group

17.52

2.94

20.16%

Hello Group Earnings Call Summary

Earnings Call Date:Mar 12, 2025

(Q4-2024)

% Change Since: -13.64%|

Next Earnings Date:Jun 05, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mixed sentiment with notable growth in overseas markets and standalone new apps, but significant declines in the core Momo app and Tantan revenues, as well as overall group revenue. Although there are strategic plans to mitigate these challenges, the current outlook remains cautious with a focus on profitability and cost optimization.

Q4-2024 Updates

Positive Updates

Overseas Business Growth

Overseas business maintained robust growth momentum, contributing significantly to the group's financial standing. Soulchill's revenue grew by 50% from 2023, nearing RMB1 billion and surpassing Tantan's earnings.

Growth in Standalone New Apps

Revenue from standalone new apps increased by 37% year-over-year in Q4 and 40% for fiscal 2024, driven primarily by overseas expansion.

Special Cash Dividend

Announcement of a special cash dividend of $0.30 per ADS, totaling approximately $50 million, marking the seventh consecutive year of dividend issuance.

Negative Updates

Decrease in Total Group Revenue

Total group revenue for fiscal 2024 was RMB10.6 billion, a decrease from RMB12 billion the previous year.

Decline in Momo App Revenue

Momo app revenue decreased by 16% year-over-year, primarily due to proactive product adjustments and macroeconomic factors.

Significant Decrease in Tantan Revenue

Q4 revenue for Tantan totaled RMB213 million, down 22% year-over-year. Fiscal 2024 revenue was RMB900 million, down 25% from the previous year.

Overall Decline in Paying Users

Momo app had 5.7 million paying users, a sequential decrease of 1.2 million, due to cost reduction and efficiency improvement strategies.

Company Guidance

During the fourth quarter and fiscal year 2024 earnings conference call for Hello Group Inc., significant financial metrics were disclosed. For Q4, the total group revenue was RMB2.64 billion, reflecting a 12% year-over-year decrease. The adjusted operating income for this period was RMB280 million, with a margin of 10.6%. Excluding RMB94 million in film production-related expenses, the adjusted operating income would have been RMB374 million with a margin of 14.2%. Revenue from the Momo app and standalone new apps decreased by 11% year-over-year to RMB2.42 billion, mainly due to an 18% decline in the Momo app's revenue, which was a result of proactive product adjustments and a weak macro economy. However, the standalone new app revenue increased by 37%. The Tantan app saw a 22% drop in Q4 revenue, totaling RMB213 million. Overall, total group revenue for fiscal 2024 was RMB10.6 billion compared to RMB12 billion last year, with an adjusted operating income of RMB1.173 billion and a margin of 16.3%. The CEO, Tang Yan, emphasized the company's satisfactory financial and operational results despite challenges in 2024 and expressed intentions to drive growth in international markets. For fiscal 2025, the company aims to maintain a stable operation for the Momo app, achieve profitability for Tantan, and expand overseas. The board has also approved a special cash dividend of $0.30 per ADS for a total cash payment of approximately $50 million, marking the seventh consecutive year of such shareholder returns.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.