A new analysis of Chinese social media company Hello Group, which manages the Momo and Tantan apps, says “the company’s near-term growth prospects seem promising”. It assessed how the company will manage regulatory challenges and its financial outlook.
After Momo’s share prices reached an all-time high in 2018, Seeking Alpha reports that it has been declining, even losing more than 90% of its valuation.
For a Chinese company listed on U.S. exchanges, there are a variety of audit and data protection regulations surrounding Hello Group. However, despite challenges with local authorities, the company has remained fairly stable due to a “robust business model and competent management”, the article shares.
With China still keeping strict Covid protocols, social apps have become less popular, with Tantan’s paying users decreasing. However, Covid restrictions are not expected to last much longer, giving online dating the opportunity to bounce back.
Regarding Hello Group’s financial outlook, “the company’s balance sheet is deep enough to support a lengthy period of growth stagnation through the utilisation of accumulated cash”, says Seeking Alpha.
This financial resilience is a key factor as the article summarises “there is substantial upside based on the depressed valuation and a possible continuation of the upswing resulting from management’s move towards operating leverage”.