Why Match (MTCH) Shares Are Plunging Today

Max Juang /
2023/11/01 3:43 pm EDT

What Happened:

Shares of dating app company Match (NASDAQ:MTCH) fell 8.96% in the afternoon session after the company reported third quarter results and a fourth quarter revenue outlook that missed expectations. This quarter's revenue, however, beat analysts' expectations, driven by better-than-expected ARPU growth. Double-clicking into Match's revenue growth this quarter, we can see that its ARPU gains were slightly offset by year-on-year subscriber churn. This churn can be attributed to management's significant price increases, a new strategy the team implemented at the start of the year. Its subscribers did increase sequentially, however, which is an encouraging sign. It could signal that the initial shock from the higher prices could be stabilizing. Some analysts are expecting Match to return to subscriber growth in Q1 of next year. Furthermore, management has taken measures to make the company more efficient, enabling it to beat Wall Street's adjusted operating income and EPS estimates. Overall, the results could have been better but show glimpses of hope that the company's turnaround strategy is working.

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What is the market telling us:

Match's shares are very volatile and over the last year have had 22 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 6 months ago, when the company gained 5.61% on the news that the company reported first-quarter results that topped analysts' estimates for revenue, paying customers, adjusted operating income, and earnings per share (EPS). However, free cash flow was below the Consensus. In addition, revenue and adjusted operating income guidance for the next quarter missed analysts' expectations. Despite the weak topline guidance, management added that "Total Revenue and Tinder Direct Revenue can both exit 2023 with double-digit Y/Y growth", which suggests potential acceleration in revenue growth. Finally the company announced board approval for an incremental $1B share buyback. Overall, it was a mixed quarter for the company. The stock initially traded down on the results, but the market seemed to digest the more detailed commentary related to the individual apps and the company's outlook, resulting in a subsequent rebound.

Match is down 29.3% since the beginning of the year, and at $29.02 per share it is trading 46.4% below its 52-week high of $54.12 from January 2023. Investors who bought $1,000 worth of Match's shares at the IPO in June 2020 would now be looking at an investment worth $274.58.

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