Hello Group Inc. (NASDAQ: MOMO)

Sector: Communication Services Industry: Internet Content & Information CIK: 0001610601
Market Cap 1.23 Bn
P/B 0.78
P/E 11.65
P/S 0.84
ROIC (Qtr) 61.63
Div Yield % 4.30
Rev 1y % (Qtr) -0.92
Total Debt (Qtr) 22.46 Mn
Debt/Equity (Qtr) 0.01

About

Hello Group Inc., also known as MOMO, is a prominent player in mainland China's online social networking sector. The company's portfolio includes mobile applications such as Momo, Tantan, and other properties that facilitate social interactions and connections based on location, interests, and various online recreational activities. Momo is a social app that connects people, while Tantan is a leading dating application that helps users find and establish romantic connections. Hello Group Inc. generates revenue primarily through its live video service,...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 148.46M provides robust 6.61x coverage of total debt 22.46M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 606.25M provide 45.18x coverage of short-term debt 13.42M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 148.46M provides exceptional 525.11x coverage of minority interest expenses 282724.72, showing strong core operations.
  • Strong tangible asset base of 1.81B provides 80.42x coverage of total debt 22.46M, indicating robust asset backing and low credit risk.
  • Cash position of 606.25M provides exceptional 2144.30x coverage of minority interest expenses 282724.72, indicating strong liquidity.

Bear case

  • Investment activities of 21.04M provide weak support for R&D spending of 110.33M, which is 0.19x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 606.25M provide limited coverage of acquisition spending of (104.41M), which is -5.81x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 148.46M provides minimal 1.22x coverage of tax expenses of 121.27M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of 121.20M represents just -0.20x of debt issuance (607.48M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Long-term investments of 217.95M represent a high 1.33x of fixed assets 163.36M, indicating potential overexposure to financial assets versus operational capabilities.

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Internet Content & Information
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GOOGL Alphabet Inc. 4,538.16 Bn 131.46 27.23 33.71 Bn
2 META Meta Platforms, Inc. 1,747.49 Bn 74.30 23.25 51.06 Bn
3 SPOT Spotify Technology S.A. 103.00 Bn 62.32 5.18 2.57 Bn
4 BIDU Baidu, Inc. 62.73 Bn 49.63 3.42 13.66 Bn
5 RDDT Reddit, Inc. 32.18 Bn 92.16 16.90 0.03 Bn
6 NBIS Nebius Group N.V. 27.81 Bn 127.53 81.80 4.51 Bn
7 TME Tencent Music Entertainment Group 24.66 Bn 15.77 5.54 0.54 Bn
8 PINS Pinterest, Inc. 16.95 Bn 8.53 4.18 0.21 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.03 1.10
EV to Cash from Ops. EV/CFO 0.39 -3.08
EV to Debt EV to Debt 2.57 28.98
EV to EBIT EV/EBIT 0.24 -26.54
EV to EBITDA EV/EBITDA 0.30 9.30
EV to Free Cash Flow [EV/FCF] EV/FCF 0.48 -67.01
EV to Market Cap EV to Market Cap 0.05 0.90
EV to Revenue EV/Rev 0.04 61.25
Price to Book Value [P/B] P/B 0.78 1.56
Price to Earnings [P/E] P/E 11.65 2.92
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 0.33
Dividend Payout Ratio % Div Payout % (Qtr) 50.10 -8.92
Dividend per Basic Share Div per Share (Qtr) 0.30 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 5.78 2.58
Interest Coverage Int. cover (Qtr) 15.80 -202.56
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 66.58 -24.06
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -41.56 175.36
Dividend Growth (1y) % Div 1y % (Qtr) -44.44 0.94
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -41.24 31.53
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -30.83 -472.14
EBIT Growth (1y) % EBIT 1y % (Qtr) -26.69 32.66
EBT Growth (1y) % EBT 1y % (Qtr) -27.92 -25.80
EPS Growth (1y) % EPS 1y % (Qtr) -40.83 -18.36
FCF Growth (1y) % FCF 1y % (Qtr) -17.93 20.83
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -12.82 19.58
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.11 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 2.26 1.54
Current Ratio Curr Ratio (Qtr) 5.21 3.38
Debt to Equity Ratio Debt/Equity (Qtr) 0.01 -0.39
Interest Cover Ratio Int Coverage (Qtr) 15.80 -202.56
Times Interest Earned Times Interest Earned (Qtr) 15.80 -202.56
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.20 -4,283.87
EBIT Margin % EBIT Margin % (Qtr) 117.89 -4,786.62
EBT Margin % EBT Margin % (Qtr) 15.51 -5,002.12
Gross Margin % Gross Margin % (Qtr) 37.10 58.65
Net Profit Margin % Net Margin % (Qtr) 7.20 -5,003.08