Cheetah Mobile's stock hits a new low amid advertising fraud allegations and transformation pressures

Tech Observation Network Cheetah Mobile (CMCM.N) recently saw its stock price fall to a historic low, mainly due to allegations of advertising fraud, combined with market concerns over the sustainability of performance after earnings reports.

Recent Stock Performance

Application analytics company Kochava released a report accusing Cheetah Mobile of using “Click Injection” methods in seven apps on Google Play to fraudulently earn advertising revenue, involving over 2 billion downloads. The report states these apps monitor user installation behavior and hijack commissions meant for other promoters as their own income. The next day, Cheetah Mobile’s stock plummeted 32%, wiping out about one-third of its market value. The company then denied the allegations, claiming 97% of ad revenue comes from third-party SDKs and that it has neither the motive nor the ability to commit fraud, and plans to sue Kochava. Despite the clarification, the incident triggered a chain reaction: Google removed apps like Cheetah File Manager, and the Shanghai Consumer Protection Committee reported that Cheetah Browser was collecting excessive user information (such as default permissions for monitoring and making calls). Multiple negative factors increased market panic, leading to continued stock pressure.

Performance and Business Situation

In the third quarter, Cheetah Mobile’s AI business revenue exceeded 50% of total revenue for the first time (1.45 billion yuan, up 150.8% year-over-year), and the company achieved its first non-GAAP operating profit in six years, totaling 15.12 million yuan. However, the 2025 fiscal year financial report showed that despite a 530% year-over-year increase in full-year non-GAAP net profit to 1.4215 billion yuan, revenue from tools in the fourth quarter declined 4.2% year-over-year, and overseas market growth was weak (only a 1.4% increase). Market concerns center on the possibility that the decline of traditional internet business may outpace AI growth, affecting long-term profitability stability.

Stock Price and Capital Performance

As of February 12, Cheetah Mobile’s stock closed at $5.65, down 6.30% for the day, with a nearly 18.47% decline over the past month, hitting a new low since listing. Trading volume was light (average daily trading over the past five days was only $63,000), increasing volatility risk due to low liquidity. While institutions generally maintain a “buy” rating (e.g., Guoyuan International set a target price of $9), short-term confidence remains weak.

The above content is compiled from public information and does not constitute investment advice.