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Hello Group Inc. (MOMO)
:MOMO

Hello Group (MOMO) AI Stock Analysis

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MO

Hello Group

(NASDAQ:MOMO)

Rating:79Outperform
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 (MOMO) vs. SPDR S&P 500 ETF (SPY)

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 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 Earnings Call Summary

Earnings Call Date:Jun 05, 2025
(Q1-2025)
|
% Change Since: 36.48%|
Next Earnings Date:Sep 03, 2025
Earnings Call Sentiment Neutral
The earnings call reflected significant growth in overseas markets, driven by innovations and expansions in social entertainment products, which partially offset domestic revenue declines. While there were notable achievements in user engagement and ROI improvements, the company faced challenges in domestic revenue and gross margin pressures. Despite these challenges, the focus on growing overseas markets suggests a positive long-term outlook.
Q1-2025 Updates
Positive Updates
Overseas Revenue Growth
Overseas revenue accounted for 16% of total revenue in Q1 2025, up from less than 10% in Q1 2024, with a year-over-year growth of 72%.
Successful Product Innovations
Introduction of AI algorithms in Momo and Tantan apps improved user engagement and retention, with significant increases in metrics such as two-way chats and user retention.
Social Entertainment in MENA Region
The company's social entertainment products in the MENA region, like Socho, Yahala, and Amar, showed rapid growth and are expected to maintain strong growth momentum.
Tantan's Improved ROI
Tantan's marketing spend decreased, but ROI improved significantly, creating flexibility for product experience optimization and supporting profitability.
Negative Updates
Domestic Revenue Decline
Domestic revenue reached RMB2.11 billion, down 9% year over year, with a forecasted decline of 10% plus or minus for the full year 2025.
Decreased Operating Income
Adjusted operating income was RMB350 million, down 33% from Q1 last year, with a margin of 14%, down six percentage points from the same period last year.
Gross Margin Pressure
Non-GAAP gross margin for Q1 2025 was 37.9%, down 3.5 percentage points from the year-ago period, mainly due to overseas business mix and higher payout ratios.
Challenges from Political Unrest
Political unrest in the Middle East and Ramadan affected user spending sentiment, impacting revenue growth for social entertainment products in the region.
Company Guidance
During the first quarter of 2025, Hello Group Inc. reported a total group revenue of RMB2.52 billion, slightly down 1.5% year over year but exceeding the high end of their guidance. The company highlighted significant growth in overseas revenue, which accounted for 16% of the total revenue, an increase from less than 10% in Q1 2024. Overseas revenue reached RMB415 million, marking a 72% year-over-year growth, while domestic revenue was RMB2.11 billion, down 9% year over year. The adjusted operating income was RMB350 million, a 33% decrease from the previous year, with an operating margin of 14%. The company also noted a significant decrease in Momo app users, dropping to 4.2 million paying users, a reduction of 1.5 million. Despite this, the overseas business showed strong performance, with products like Socho contributing significantly to revenue growth. For the second quarter, the company forecasts revenue between RMB2.57 billion and RMB2.67 billion, anticipating a decrease of 4.5% to 0.8% year over year, with a focus on continued overseas expansion and product innovation.

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
75
Positive
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
80
Positive
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
70
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue10.52B10.56B12.00B12.70B14.58B15.02B
Gross Profit4.01B4.12B4.98B5.28B6.19B7.05B
EBITDA1.79B1.59B2.79B1.74B175.95M2.90B
Net Income1.39B1.04B1.96B1.48B-2.92B2.10B
Balance Sheet
Total Assets16.73B18.38B16.23B15.83B18.11B23.22B
Cash, Cash Equivalents and Short-Term Investments6.14B6.15B6.89B10.62B8.43B10.93B
Total Debt2.86B4.58B2.29B2.77B4.83B4.93B
Total Liabilities5.46B6.95B4.24B4.90B7.53B8.39B
Stockholders Equity11.08B11.43B11.80B10.93B10.59B14.84B
Cash Flow
Free Cash Flow1.21B1.35B1.70B1.15B1.46B2.96B
Operating Cash Flow1.48B1.64B2.28B1.23B1.56B3.08B
Investing Cash Flow190.66M-558.89M2.41B1.72B2.55B-748.47M
Financing Cash Flow-2.88B236.20M-1.70B-3.43B-1.79B-1.50B

Hello Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price8.53
Price Trends
50DMA
7.11
Positive
100DMA
6.75
Positive
200DMA
6.75
Positive
Market Momentum
MACD
0.42
Positive
RSI
63.11
Neutral
STOCH
55.94
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 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 (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$1.41B8.0112.39%-11.02%-5.17%
WBWB
73
Outperform
$2.33B7.1210.79%8.39%0.83%22.06%
TMTME
72
Outperform
$29.85B23.4014.37%0.90%4.59%83.27%
71
Outperform
$2.21B16.6619.74%5.93%29.17%
64
Neutral
$2.64B-2.48%7.38%-3.61%-143.37%
58
Neutral
C$3.40B8.17-17.94%5.77%-2.70%-16.54%
58
Neutral
$11.23B189.78-10.51%-97.73%-217.89%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MOMO
Hello Group
8.53
2.27
36.26%
NBIS
Nebius Group
46.05
27.11
143.14%
YELP
Yelp
34.58
-0.60
-1.71%
JOYY
JOYY
53.52
20.55
62.33%
WB
Weibo
9.74
2.28
30.56%
TME
Tencent Music Entertainment Group
20.35
5.47
36.76%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 28, 2025