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Hello Group (MOMO)
NASDAQ:MOMO
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Hello Group
(NASDAQ:MOMO)
Rating:79Outperform
Price Target:
$10.00
▲(18.48%Upside)
Positive Factors
International Growth
Overseas revenue surged 73% year-over-year, now making up 16% of total revenue, driven largely by headcount reductions and improved operating efficiency across core businesses.
Operating Trends
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
Operational Challenges
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.
Profit Margins
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)
Market Cap
$1.36B
Dividend YieldN/A
Average Volume (3M)1.26M
Price to Earnings (P/E)8.0
Beta (1Y)0.49
Revenue Growth-11.02%
EPS Growth-5.17%
CountryUS
Employees1,390
SectorCommunication Services
Sector Strength70
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.29
Shares Outstanding120,487,236
10 Day Avg. Volume1,235,930
30 Day Avg. Volume1,259,412
Financial Highlights & Ratios
PEG Ratio0.22
Price to Book (P/B)0.98
Price to Sales (P/S)0.00
P/FCF Ratio8.31
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$10.65Price Target Upside26.18% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Hello Group Business Overview & Revenue Model
Company DescriptionHello Group Inc., formerly known as Momo Inc., is a leading online social networking platform in China. The company operates mobile-based social networking applications that facilitate communication and interaction among users. It offers multiple services, including live video streaming, social discovery, and online entertainment, catering to a broad audience seeking social connections and entertainment.
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 Key Performance Indicators (KPIs)
Any
Monthly Active Users
Indicates the number of users engaging with the platform each month, reflecting user retention, platform popularity, and potential for monetization.
Indicates the number of users engaging with the platform each month, reflecting user retention, platform popularity, and potential for monetization.
Data provided by:
Main Street Data
Main Street DataHello Group Earnings Call Summary
Earnings Call Date:Jun 05, 2025
(Q1-2025)
| % Change Since: 35.04%|
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
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.75
Positive
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.80
Positive
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.70
Positive
| 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
Neutral
8.44
Price Trends
7.88
Positive
6.95
Positive
6.88
Positive
Market Momentum
0.16
Positive
49.17
Neutral
9.64
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MOMO, the sentiment is Neutral. The current price of 8.44 is below the 20-day moving average (MA) of 8.69, above the 50-day MA of 7.88, and above the 200-day MA of 6.88, indicating a neutral trend. The MACD of 0.16 indicates Positive momentum. The RSI at 49.17 is Neutral, neither overbought nor oversold. The STOCH value of 9.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 | $1.36B | 7.98 | 12.39% | ― | -11.02% | -5.17% | |
75 Outperform | $2.50B | 7.53 | 10.79% | 8.03% | 0.83% | 22.06% | |
73 Outperform | $2.23B | 16.68 | 19.74% | ― | 5.93% | 29.17% | |
72 Outperform | $30.43B | 25.22 | 14.37% | 0.83% | 4.59% | 83.27% | |
64 Neutral | $2.62B | ― | -2.48% | 3.70% | -3.61% | -143.37% | |
58 Neutral | kr14.25B | 10.79 | 19.17% | 3.54% | -8.53% | 5.66% | |
58 Neutral | $12.57B | 189.78 | -10.51% | ― | -97.73% | -217.89% |
* Communication Services Sector Average
Performance Comparison
MOMO
Hello Group
8.44
2.03
31.67%
NBIS
Nebius Group
50.40
31.46
166.10%
YELP
Yelp
34.68
-1.75
-4.80%
JOYY
JOYY
50.48
18.57
58.19%
WB
Weibo
10.21
3.28
47.33%
TME
Tencent Music Entertainment Group
21.75
7.74
55.25%
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.