Hello Group (MOMO) AI Stock Analysis

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Hello Group

(NASDAQ:MOMO)

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Outperform 74 (OpenAI - 4o)

Rating:74Outperform

Price Target:

$9.00

▲(20.48% Upside)

Hello Group's overall stock score reflects a stable financial position and attractive valuation, which are the most significant factors. The company's strong balance sheet and low P/E ratio suggest financial resilience and potential undervaluation. However, technical indicators and earnings call insights reveal challenges, particularly in domestic revenue and user engagement, which weigh on the score. The strategic focus on international expansion and AI integration offers potential upside, but domestic challenges and tax impacts remain concerns.

Positive Factors

Overseas Revenue Growth

Strong overseas revenue growth signifies successful market expansion and diversification, reducing reliance on domestic markets and enhancing long-term revenue stability.

Strong Balance Sheet

A strong balance sheet with low leverage enhances financial resilience, providing the company with the flexibility to invest in growth opportunities and weather economic downturns.

Operational Efficiency

Healthy EBITDA and EBIT margins reflect efficient cost management and operational effectiveness, supporting sustainable profitability and competitive positioning.

Negative Factors

Domestic Revenue Decline

Declining domestic revenue indicates challenges in the core market, potentially impacting overall growth and necessitating strategic adjustments to regain market share.

Decrease in Paying Users

A decrease in paying users can lead to reduced revenue from core services, highlighting the need for improved user engagement and retention strategies.

Gross Margin Decline

A declining gross margin suggests increased cost pressures or pricing challenges, which could affect profitability if not addressed through cost control or pricing strategies.

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

Market Cap

$1.19B

Dividend YieldN/A

Average Volume (3M)1.02M

Price to Earnings (P/E)11.4

Beta (1Y)0.45

Revenue Growth-7.33%

EPS Growth-34.16%

CountryUS

Employees1,390

SectorCommunication Services

Sector Strength97

IndustryInternet Content & Information

Share Statistics

EPS (TTM)-0.12

Shares Outstanding120,487,236

10 Day Avg. Volume879,786

30 Day Avg. Volume1,023,962

Financial Highlights & Ratios

PEG Ratio-0.22

Price to Book (P/B)0.92

Price to Sales (P/S)1.00

P/FCF Ratio7.77

Enterprise Value/Market Cap0.35

Enterprise Value/Revenue0.04

Enterprise Value/Gross Profit0.11

Enterprise Value/Ebitda0.25

Forecast

1Y Price Target

$13.00

Price Target Upside74.03% 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 through several key streams. The primary source of income is from value-added services, which include premium subscriptions, virtual gifts, and in-app purchases that enhance user experience on the Momo and Tantan platforms. Advertising is another significant revenue stream, where the company sells ad space to businesses looking to reach its large user base. Additionally, Hello Group benefits from partnerships with various brands and organizations, allowing for promotional campaigns and collaborations that drive further revenue. The integration of live streaming and e-commerce features also provides new monetization opportunities, particularly as users engage in virtual gifting during live broadcasts.

Hello Group Key Performance Indicators (KPIs)

Any

Monthly Active Users

Monthly Active Users
Indicates the number of users engaging with the platform each month, reflecting user retention, platform popularity, and potential for monetization.

Chart InsightsHello Group's Monthly Active Users have been on a declining trend since late 2021, with a notable drop in 2024. This aligns with the earnings call, which highlights a significant decrease in domestic user engagement. However, the company is offsetting this with strong growth in overseas markets, particularly in social entertainment products in the MENA region. Despite domestic challenges, the focus on international expansion and product innovation suggests a strategic pivot that could stabilize and potentially grow user numbers in the future.

Data provided by:

Main Street Data

Hello Group Earnings Call Summary

Earnings Call Date:Sep 09, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Dec 04, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture, with significant growth in overseas revenue and advancements in AI integration being overshadowed by declines in overall and domestic revenue, and a notable one-off tax expense. While there is optimism in overseas expansion and technology adoption, challenges remain in domestic performance and tax implications.

Q2-2025 Updates

Positive Updates

Overseas Revenue Growth

Overseas business revenue reached RMB 442 million, up 73% year-over-year and 7% quarter-over-quarter, now accounting for 17% of the group revenue compared to 10% in the same period last year.

AI Integration and Innovation

The company has successfully integrated AI into its social products, enhancing user experience, with efforts including AI greeting and chat assistant features, as well as launching a stand-alone AI character role play app in Japan.

Non-GAAP Net Income Increase

Excluding a one-off tax expense, non-GAAP net income for the quarter would have been RMB 451.9 million, up 1% from Q2 last year and 12% from last quarter.

Stabilization and Growth in Tantan International

Tantan International revenue has stabilized after a strategic shift to focus on core dating experience, with a plan to expand further in Southeast Asia.

Negative Updates

Overall Revenue Decline

Total group revenue was RMB 2.62 billion, down 3% year-over-year, with domestic revenue reaching RMB 2.18 billion, down 11% year-over-year.

Withholding Tax Adjustment

The company accrued a withholding income tax expense of RMB 547.9 million due to a change in the applicable tax rate from 5% to 10% by Chinese tax authorities, impacting prior periods.

Decrease in Momo Value-Added Services Revenue

Momo value-added service revenue reached RMB 1.85 billion, down 11% year-over-year, mainly due to soft spending sentiment among high-paying users amid a weak macro environment.

Decrease in Paying Users

Momo app had 3.5 million paying users, a sequential decrease of 0.6 million, and Tantan had 740,000 paying users, a decrease of 80,000 from Q1.

Company Guidance

During the second quarter of 2025, Hello Group reported a total revenue of RMB 2.62 billion, a decline of 3% year-over-year, with domestic revenue at RMB 2.18 billion, down 11%, and overseas revenue at RMB 442 million, up 73%. The adjusted operating income was RMB 448 million, with a margin of 17%. The company focused on maintaining the productivity of its cash cow business, Momo, and improving Tantan's core dating experience. Momo's app enhancements, including AI features, helped stabilize user retention, achieving 3.5 million paying users, albeit a sequential decrease of 0.6 million. Tantan's revenue was RMB 160 million, down 18% year-over-year, but with an ARPPU increase of 18%. Overseas revenue grew to account for 17% of the total group revenue, driven by social products in the MENA region. For the third quarter, Hello Group projected revenue to be between RMB 2.59 billion and RMB 2.69 billion. The company also discussed adjustments to tax compliance, impacting the financials due to a change in the withholding income tax rate from 5% to 10%, which resulted in a one-off tax expense of RMB 547.9 million.

Hello Group Financial Statement Overview

Summary

Hello Group demonstrates a stable financial position with robust profitability and efficiency in operations. The income statement reflects healthy margins, though revenue contraction may be a concern. The balance sheet is strong, with low leverage and a high equity ratio supporting financial resilience. While cash flow generation is good, the decline in free cash flow growth warrants attention. Overall, the company is in a solid financial position but should focus on reversing revenue declines and improving cash flow growth.

Income Statement

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

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

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	10.45B	10.56B	12.00B	12.70B	14.58B	15.02B
Gross Profit	3.93B	4.12B	4.98B	5.28B	6.19B	7.05B
EBITDA	1.67B	1.59B	2.79B	1.74B	2.27B	2.90B
Net Income	854.39M	1.04B	1.96B	1.48B	-2.92B	2.10B
Balance Sheet
Total Assets	16.52B	18.38B	16.23B	15.83B	18.11B	23.22B
Cash, Cash Equivalents and Short-Term Investments	6.33B	6.15B	6.89B	10.62B	8.43B	10.93B
Total Debt	2.67B	4.58B	2.29B	2.77B	4.83B	4.93B
Total Liabilities	5.52B	6.95B	4.24B	4.90B	7.53B	8.39B
Stockholders Equity	10.99B	11.43B	11.80B	10.78B	10.45B	14.64B
Cash Flow
Free Cash Flow	1.16B	1.35B	1.70B	1.15B	1.46B	2.96B
Operating Cash Flow	1.25B	1.64B	2.28B	1.23B	1.56B	3.08B
Investing Cash Flow	-490.29M	-558.89M	2.41B	1.72B	2.55B	-748.47M
Financing Cash Flow	-2.23B	236.20M	-1.70B	-3.43B	-1.79B	-1.50B

Hello Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price7.47

Price Trends

50DMA

7.94

Negative

100DMA

7.85

Negative

200DMA

7.19

Positive

Market Momentum

MACD

-0.16

Negative

RSI

42.13

Neutral

STOCH

56.55

Neutral

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 7.47 is below the 20-day moving average (MA) of 7.57, below the 50-day MA of 7.94, and above the 200-day MA of 7.19, indicating a neutral trend. The MACD of -0.16 indicates Negative momentum. The RSI at 42.13 is Neutral, neither overbought nor oversold. The STOCH value of 56.55 is Neutral, 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	79 Outperform	$32.23B	24.79	14.07%	0.79%	10.66%	84.89%
WB	74 Outperform	$3.16B	8.93	10.77%	6.50%	1.21%	14.72%
MOMO	74 Outperform	$1.19B	11.36	7.65%	―	-7.33%	-34.16%
Z	66 Neutral	$18.48B	―	-1.34%	―	15.31%	56.19%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
NBIS	60 Neutral	$31.61B	139.24	4.95%	―	-95.06%	1.92%
JOYY	59 Neutral	$3.02B	―	-2.32%	4.79%	-7.07%	-150.40%

* Communication Services Sector Average

Performance Comparison

MOMO

Hello Group

7.47

<0.01

0.13%

NBIS

Nebius Group

127.98

109.04

575.71%

Zillow Group Class C

76.79

16.03

26.38%

JOYY

58.71

24.95

73.90%

Weibo

12.61

2.09

19.87%

TME

Tencent Music Entertainment Group

22.90

9.72

73.75%

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: Sep 09, 2025