Hello Group (MOMO) AI Stock Analysis

• Market Cap: $1.41B
• Dividend Yield: N/A
• Average Volume (3M): 1.54M
• Price to Earnings (P/E): 8.0
• Beta (1Y): 0.52
• Revenue Growth: -11.02%
• EPS Growth: -5.17%
• Country: US
• Employees: 1,390
• Sector: Communication Services
• Sector Strength: 83
• Industry: Internet Content & Information
• EPS (TTM): 0.29
• Shares Outstanding: 120,487,236
• 10 Day Avg. Volume: 1,005,491
• 30 Day Avg. Volume: 1,542,068
• PEG Ratio: 0.21
• Price to Book (P/B): 0.94
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 7.92
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $10.27
• Price Target Upside: 20.40% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 79 Outperform
• Price Target: $10.00 ▲(17.23%Upside)

The strong technical analysis and reasonable valuation drive the positive overall score. While financial performance is solid, concerns over revenue decline and cash flow growth slightly offset the positive aspects.

Positive Factors

Financial Opportunities

Despite a strong stock move, shares still trade at a ~15% discount to net cash, leaving room for meaningful upside.

International Expansion

MOMO is at a fundamental inflection point, showing early signs of a breakout fueled by improving operating trends and accelerating international momentum.

Shareholder Returns

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

Negative Factors

App Performance

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.

Profitability Concerns

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

Hello Group Business Overview & Revenue Model

Company Description

Hello 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 Money

Hello Group generates its revenue primarily through its live video service, where users can purchase virtual gifts to send to broadcasters during live streams, thereby incentivizing content creators and enhancing user engagement. Additionally, the company earns from membership subscriptions, mobile marketing services, and games. Key revenue streams include virtual gifting, premium membership subscriptions, and in-app advertising. Strategic partnerships with content creators and advertisers also play a significant role in its overall earnings strategy.

Hello Group Financial Statement Overview

Summary

Hello Group's financials show solid profitability and operational efficiency, with strong margins and low debt. However, revenue is declining, and free cash flow growth is a concern.

Income Statement

The income statement shows a mix of strengths and challenges. The gross profit margin for TTM (Trailing-Twelve-Months) is strong at 38.1%, indicating efficient cost management. However, the net profit margin of 13.2% reflects moderate profitability. Revenue has declined from previous years, showing a decrease of 11.6% from 2023 to 2024, highlighting potential challenges in sustaining growth. EBITDA and EBIT margins are healthy, with the TTM EBITDA margin at 16.96% and EBIT margin at 13.04%, suggesting robust operational efficiency.

Balance Sheet

The balance sheet is strong with a low debt-to-equity ratio of 0.26 for TTM, indicating a conservative leverage position and financial stability. The return on equity (ROE) is solid at 12.57%, reflecting effective use of equity to generate profits. The equity ratio stands at 66.22%, suggesting that equity largely finances the company's assets, enhancing financial stability. The company's strong cash position and low net debt further underscore its healthy financial standing.

Cash Flow

The cash flow analysis reveals a mixed picture. The operating cash flow to net income ratio is robust at 1.06, indicating good cash generation relative to net income. However, the free cash flow growth rate has shown a decline of 10.66% from 2023 to 2024, which might pose challenges for reinvestment and growth. The free cash flow to net income ratio is healthy at 0.87, underscoring a strong ability to generate cash after capital expenditures.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	10.52B	10.56B	12.00B	12.70B	14.58B	15.02B
Gross Profit	4.01B	4.12B	4.98B	5.28B	6.19B	7.05B
EBITDA	1.79B	1.59B	2.79B	1.74B	175.95M	2.90B
Net Income	1.39B	1.04B	1.96B	1.48B	-2.92B	2.10B
Balance Sheet
Total Assets	16.73B	18.38B	16.23B	15.83B	18.11B	23.22B
Cash, Cash Equivalents and Short-Term Investments	6.14B	6.15B	6.89B	10.62B	8.43B	10.93B
Total Debt	2.86B	4.58B	2.29B	2.77B	4.83B	4.93B
Total Liabilities	5.46B	6.95B	4.24B	4.90B	7.53B	8.39B
Stockholders Equity	11.08B	11.43B	11.80B	10.93B	10.59B	14.84B
Cash Flow
Free Cash Flow	1.21B	1.35B	1.70B	1.15B	1.46B	2.96B
Operating Cash Flow	1.48B	1.64B	2.28B	1.23B	1.56B	3.08B
Investing Cash Flow	190.66M	-558.89M	2.41B	1.72B	2.55B	-748.47M
Financing Cash Flow	-2.88B	236.20M	-1.70B	-3.43B	-1.79B	-1.50B

Hello Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 8.53
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MOMO, the sentiment is Positive. The current price of 8.53 is above the 20-day moving average (MA) of 8.46, above the 50-day MA of 7.11, and above the 200-day MA of 6.75, indicating a bullish trend. The MACD of 0.42 indicates Positive momentum. The RSI at 63.11 is Neutral, neither overbought nor oversold. The STOCH value of 55.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MOMO.

Hello Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MOMO	79 Outperform	$1.41B	8.01	12.39%	―	-11.02%	-5.17%
WB	73 Outperform	$2.33B	7.12	10.79%	8.39%	0.83%	22.06%
TME	72 Outperform	$29.85B	23.40	14.37%	0.90%	4.59%	83.27%
YELP	71 Outperform	$2.21B	16.66	19.74%	―	5.93%	29.17%
JOYY	64 Neutral	$2.64B	―	-2.48%	7.38%	-3.61%	-143.37%
Sector *	58 Neutral	C$3.40B	8.17	-17.94%	5.77%	-2.70%	-16.54%
NBIS	58 Neutral	$11.23B	189.78	-10.51%	―	-97.73%	-217.89%