Problems at Yalla Group (YALA)

Problems at Yalla Group (YALA)

Yalla Group (NYSE: YALA — $2.45 billion) is an audio-based social network sometimes called “the Clubhouse of the Middle East.” Yalla makes money when users buy virtual stickers as gifts for other participants. The company recently faced fraud allegations, which appear substantiated but have not received proper attention from Wall Street. If the fraud allegations are true, Yalla could join the long list of US-listed Chinese companies that have imploded after misstating investor metrics.

Yalla is a company full of contradictions. The company claims to be based in the United Arab Emirates, but its mailing address, management, investors, and 95% of its office space are in China.

Yalla claims to have over 18 million monthly active users, but the company has only 134 followers on Twitter, 217 followers on YouTube, and 343 followers on Instagram.

Two activist reports published this week raise similar issues with Yalla’s metrics. However, because the authors are anonymous and have relatively s…