Why Match Group (MTCH) Shares Are Sliding Today

Anthony Lee /
2024/05/08 12:23 pm EDT

What Happened:

Shares of dating app company Match (NASDAQ:MTCH) fell 9.6% in the morning session after the company reported first quarter earnings results. Its payers declined, and its revenue guidance for next quarter missed Wall Street's estimates. Despite the guidance miss, there were some bright spots. The company disclosed 50 million MAUs (monthly active users) for Tinder and is on pace to buy back nearly 10% of its shares when this year is said and done. In addition, revenue and EPS came in ahead of expectations during the quarter. The Tinder payer declines and weak guidance are what the market is homing in on, and this quarter's results and guidance weren't what we were looking for.

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What is the market telling us:

Match Group's shares are quite volatile and over the last year have had 11 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 4 months ago, when the company gained 10.6% on the news that the Wall Street Journal reported that Elliott Investment Management acquired a significant stake of about $1 billion in the company (a nearly 10% position prior to the move). The hedge fund plans to engage with Match Group to enhance its stock performance just as the market seems worried about declines in paying customers. 

This move is notable given Elliott’s track record for activist campaigns that often bring about significant changes in target companies, focusing on aspects like improving asset monetization, expense efficiency, and stock buybacks among other changes. In our December research report exclusive to members of StockStory Edge we took a firm view that the market was misunderstanding MTCH’s subscriber decline and was too negative on the stock. Our research showed that given Match Group’s dominant brands and scale, the company could not only grow paying customer numbers again but also better monetize other assets. It is comforting that another professional investor in Elliott is likely seeing what we saw just last month and we are expecting more to follow in the future.

Match Group is down 17.9% since the beginning of the year, and at $29.94 per share it is trading 38.3% below its 52-week high of $48.49 from July 2023. Investors who bought $1,000 worth of Match Group's shares at the IPO in June 2020 would now be looking at an investment worth $282.96.

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