Hello Group Inc. (MOMO) shares plummeted 9.85% in pre-market trading on Tuesday following the release of its second quarter 2025 financial results. The company, a leading player in Asia's online social networking space, reported disappointing figures that fell short of market expectations.

The Q2 report revealed a net loss of RMB140.2 million (US$19.6 million), a stark contrast to the net income of RMB397.8 million recorded in the same period last year. This downturn was compounded by a 2.6% year-over-year decrease in net revenues, which totaled RMB2,620.4 million (US$365.8 million) for the quarter.

Adding to the company's woes, Hello Group announced an unexpected additional withholding tax accrual of RMB547.9 million (US$76.5 million) related to dividends paid or payable by its wholly-foreign owned enterprise in Chinese mainland to its offshore parent company in Hong Kong. This substantial tax accrual, which applies to prior periods, significantly impacted the company's bottom line and likely contributed to the sharp stock price decline. The company stated that going forward, it will continue to accrue withholding tax at the standard rate of 10% instead of the previously applied preferential rate of 5%.