Hello Group Shares Shrug Off Upbeat 2025 Outlook

Core Viewpoint - Hello Group Inc. is experiencing a significant decline in its domestic business, prompting a strategic pivot towards international markets to seek growth opportunities [2][4][12]. Financial Performance - The company reported a revenue of 2.6 billion yuan ($359 million) for the fourth quarter, down 12% year-over-year, marking a continued decline since 2020 [5]. - Net income for the fourth quarter fell 59% to 187.2 million yuan from 452.5 million yuan a year earlier, with a nearly 50% drop for the entire year to 1 billion yuan [6]. - Livestreaming revenue decreased by 16% year-over-year to 5.1 billion yuan in 2024, now accounting for 48% of total revenue, down from 80% in previous years [11]. User Metrics - Tantan's monthly active users decreased by 2.9 million to 10.8 million, while Momo's paying users dropped from 7.4 million to 5.7 million year-over-year [9]. - The decline in paying users is attributed to a regulatory crackdown and increased competition from other platforms [10][12]. International Expansion Strategy - The company aims for overseas revenue growth of up to 100% this year, with a focus on its Soulchill app targeting Middle Eastern markets [7][12]. - New apps launched in late 2023, including Yaahlan and AMAR, are generating stable returns despite initial marketing costs [14]. - CFO Peng Hui projects overseas revenue to grow from 1 billion yuan in 2024 to between 1.7 billion yuan and 2 billion yuan in 2025 [15]. Market Challenges - The company faces competition in the Middle East from other Chinese social media companies and must navigate potential instability in the region [16]. - Entering competitive Western markets may lead to increased marketing costs and challenges against established players [17]. Investor Sentiment - Following the earnings release, Hello Group's shares fell 8%, indicating investor skepticism regarding the sustainability of its domestic services and the capital needed for international expansion [19]. - Despite a 12% increase in stock price over the last six months, it lags behind the 45% rally of the Hang Seng China Enterprises Index, reflecting doubts about the company's turnaround strategy [20].