Hello Group (MOMO) Stock Price Drops As Revenue Weakness Clouds Profit Rebound

Hello Group stock fell about 7% today to US$5.10, even as the latest numbers pointed to a very different story beneath the surface. The market reacted to another weak revenue quarter and softer guidance. Yet trailing earnings power and profitability told investors something else.

The key headline from this earnings release was profit quality. Trailing net profit margin sat at about 11% compared with 8.2% a year earlier, and earnings per share over the past twelve months were about 6.96 CNY. For a stock trading on roughly 4.5x trailing P/E, that disconnect is what drove today’s sentiment swing.

Love the low P/E and improving profit margin at Hello Group but concerned that weak revenue trends could be a value trap for your portfolio? Take a look at our 52 high quality undervalued stocks for ideas that pair stronger top line momentum with disciplined profitability.

Q2 2026 Earnings Summary

• Revenue (Q2 2026 vs. Q2 2025): 2,485.98m CNY vs. 2,620.37m CNY (revenue declined 5.1% year on year)
• Net Income excl. Extra Items (Q2 2026 vs. Q2 2025): 237.44m CNY vs. a loss of 140.20m CNY (returned to profit from a loss a year ago)
• Basic EPS (Earnings Per Share) (Q2 2026 vs. Q2 2025): 1.54 CNY vs. a loss of 0.84 CNY (returned to positive EPS from a loss a year ago)
• Non GAAP Gross Margin (Q2 2026 vs. Q2 2025): 35.8% vs. 38.8% (margin compressed by 3.0 percentage points)

Prefer clear charts over rows of shifting margins and earnings figures for Hello Group? See the full visual breakdown of the stock, including its valuation picture, in our company report for Hello Group.

Hello Group bull case hinges on overseas and AI milestones

Bulls argue that Hello Group can offset domestic softness with fast overseas expansion and AI led engagement gains. Q2 shows partial progress. Overseas revenue reached RMB 673m and accounted for 27% of group revenue compared with 17% a year earlier. Yaahlan moved to net income breakeven and Amar narrowed losses, which supports the idea of a second growth engine forming outside Mainland China.

The AI narrative also finds some tangible backing. Momo added AI chat assistants and image based matching tests, while Tantan rolled out AI icebreakers and curated matching. Management reported higher engagement and more paying users in Momo’s audio and video scenarios. However, group revenue still declined 5.1% year on year, and guidance points to a further revenue decline, with Mainland expected to fall in the high teens. The bullish thesis is progressing on product and mix, but the top line has not yet turned.

Compare Hello Group’s overseas traction and AI engagement story with how institutions are reacting to the recent 7% share price drop and shifting guidance. See the consensus price target analysis for Hello Group

Hello Group bears see revenue warnings largely validated

The bearish view on Hello Group is that domestic user strain, regulatory friction and costly overseas growth will cap revenue and compress margins. This quarter gives that view fresh support on the top line. Group revenue fell 5.1% year on year, and Q3 guidance signals a similar or steeper decline, with Mainland revenue expected to fall in the high teens. That directly reflects concerns about weakening paying users on core apps and heavy reliance on a few cash generating platforms.

Overseas revenue rose to 27% of group sales and grew strongly in absolute terms, yet management now flags that the earlier RMB 3b overseas target for 2026 is likely to be missed. Margin bears also find ammo. Non GAAP gross margin slipped from 38.8% to 35.8%, with higher payment fees and tax related agency payouts aligning with fears of structurally higher cost to serve.

After another quarter of weakening Mainland revenue and pressure on gross margin, you may want to review whether these are early signs of deeper structural strain. Expose any other red flags already flagged in our risk analysis for Hello Group which shows 2 important warning signs

Stay Ahead On Hello Group

If the mix of improving profit margins and weaker revenue trends at Hello Group has your interest, register for free with Simply Wall St and add it to a Watchlist to track price against fair value and watch for a more attractive entry point. Once you own the stock, use the Portfolio Command Center to cut through day to day noise and focus on the key financial and valuation updates that matter most. For a longer term edge, join the Community to see how other investors are thinking about the same risks and catalysts. By surfacing potential catalysts and warning signs early, you can make more confident decisions and stay ahead of the market.

Seeking Alternatives Beyond Hello Group?

Fresh stock ideas can move from quiet potential to full breakout before most investors notice. Screen for momentum and quality that are still under the radar for now and consider acting early based on your own research and objectives.

• Identify potential breakouts before they are widely talked about by scanning our curated list of 21 high quality undiscovered gems, built to spotlight quality companies still flying below most radars.
• Focus on resilient compounding potential by reviewing the 79 resilient stocks with low risk scores, which highlights companies with steadier profiles while prices and sentiment are still catching up.
• Explore powerful secular shifts by reviewing the hand picked 38 power grid technology and infrastructure stocks, which surfaces businesses tied to critical grid upgrades while the opportunity window still feels early.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com