The following is an excerpt from The Bear Cave. It is republished with permission. 

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 small followings, their research did not get a proper amount of attention from Wall Street.

(Screenshots from @akramsrazor report. Edited by The Bear Cave for clarity.)

The report also contains screenshots showing one day’s gift volume equal to about 60% of Q1 total revenue and other irrational fluctuations. The report ended with a $3.50 price target for Yalla.

I tested out Yalla’s app in both English and Arabic and noticed oddities as well. Many of the active rooms were silent or playing repetitive music. Below is a screenshot from one “active” room:

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