What happened
Shares of Hello Group (MOMO 0.67%) slid in early trading Thursday morning after the Chinese social media and entertainment platform reported its fourth-quarter and full-year results, but recovered somewhat throughout the session. As of 1:30 p.m. ET, they were down by 6.5%.
Revenue fell 3.2% to 3.67 billion yuan -- about $576.6 million at current exchange rates -- compared to a year ago, while net losses wildly expanded to 4.2 billion yuan ($665.8 million) from 651.5 million yuan last year. It subsequently wrote down $690 million in goodwill and intangibles as a result of its market cap being "significantly below its net book value of equity."
Image source: Getty Images.
So what
Hello Group operates the online dating services Momo and Tantan, and it's suffering from declining app usage as it changes its strategic focus. Total paying users of its live-video and value-added services, without double-counting those users for whom there is overlap -- and also including the 2.5 million paying users of Tantan -- stood at 11.4 million. That's down 11% from the 12.8 million paying users it had a year ago, which included 3.8 million paying users of Tantan.
Its mobile marketing revenue also plummeted 51% due to new regulatory requirements in China. Those headwinds were only slightly offset by mobile gaming revenue gains.
Now what
The dating app host has been on a long, steady decline in the past year, and though its shares got a bit of a boost recently after Beijing said it would soon end its regulatory crackdown on Chinese technology companies and do more to support those that are listed on U.S. exchanges, the worsening financial picture dealt the stock another setback.
