Hello Group Inc. (MOMO): A Bull Case Theory

We came across a bullish thesis on Hello Group Inc. on Value investing subreddit by hardervalue. In this article, we will summarize the bulls’ thesis on MOMO. Hello Group Inc.'s share was trading at $7.73 as of September 17th. MOMO’s trailing and forward P/E were 11.50 and 6.44 respectively according to Yahoo Finance.

Hello Group (MOMO) represents a compelling contrarian investment opportunity despite near-term headwinds from regulatory changes in China. The company operates a moaty social media business that generates significant free cash flow, which management has historically returned to shareholders through generous dividends and aggressive share buybacks. Over the past year, the company has repurchased approximately 50 million ADS, reducing its share count by nearly 20%, while maintaining a dividend of $0.30 per share. MOMO’s intrinsic value remains robust, with book value at $9.22 per ADS, cash of $9.38 per ADS, and net cash of $4.75 per ADS, while the current market price is $7.75, indicating the stock trades below its net cash-adjusted value.

Recent quarterly results reflected a 2% year-over-year decline in sales and a reported loss of $20 million, compared with net profits of $55 million a year ago. This shortfall was driven primarily by a new tax regime instituted by Chinese authorities, including backdated taxes and higher rates on dividends, which temporarily inflated the company’s tax burden to roughly 25–30% versus prior levels near 20%. Despite these one-time regulatory impacts, the underlying business continues to generate meaningful cash flow, and normalized earnings are estimated at roughly $1 per share annually.

The combination of strong cash generation, shareholder-friendly capital allocation, and trading below intrinsic value positions MOMO as an attractive investment, particularly for those willing to navigate regulatory noise. If the business returns to historical dividend levels closer to 10% and continues opportunistic buybacks, the company offers both income and upside potential, with limited downside given the cash-heavy balance sheet and resilient social media moat.

Previously we covered a bullish thesis on Meta Platforms, Inc. (META) by LongYield in May 2025, which highlighted the company’s strong Q1 performance, profitable advertising engine, and strategic pivot toward AI-driven growth. The company's stock price has appreciated approximately by 35.56% since our coverage. This is because the thesis played out in line with robust ad revenue and AI integration. The thesis still stands as Meta’s AI infrastructure continues to underpin long-term growth. hardervalue shares a similar approach but emphasizes MOMO’s strong cash position, shareholder returns through dividends and buybacks, and resilience amid regulatory headwinds in China.

Hello Group Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held MOMO at the end of the second quarter which was 20 in the previous quarter. While we acknowledge the potential of MOMO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.