Cupid catches up with the capital markets

Don’t worry though, love is still in the air – at least according to City analysts.

I am of course talking about online dating giant Match Group (NASDAQ:MTCH) Inc. Owners of Tinder,, Meetic, OurTime, Plenty of Fish, Pairs and Hinge.

With such an impressive portfolio, Match Group (NASDAQ:MTCH) Inc now controls a 50% market share in the online dating community.

And here I sit, a former user (Hinge, no heroin) and now a happily loved guy to introduce you to the merits of said organization although they recently exposed one of their toughest quarters at this day.

Provided Tinder Swindler hasn’t scared off all single women, there’s clearly still a huge addressable market for Match Group (NASDAQ:MTCH).

It hasn’t been the easiest time for online dating or anything involving human interaction for that matter, because just when you think you’re out of the woods, a mysterious sounding Greek letter hits back with a new viral variant, potentially more transmissible than the previous one.

Given Omicron’s continued headwinds, Match Group Inc (NASDAQ:MTCH) endured its toughest quarter yet when reporting for the three months ending December 21 with an unusual loss of 0, $60 per share – only their second loss-making quarter since floating in 2017.

To add even more pain, they are trying to tread water in an otherwise declining market with the NASDAQ 100 down more than 15% year-to-date.

At first glance, the loss of US$0.60 per share looks rather worrisome given that analysts’ expectations were for a profit of US$0.54 per share. So let’s take a look at the troublesome set of earnings and see if this is a one-off weak quarter or if there are other concerning red flags on the screen.

The problems

Headwinds FX

The Fed’s sudden U-turn from accommodative to hawkish monetary policy saw the US dollar strengthen against many emerging currencies. In turn, Match Group has seen its overseas revenue translate into fewer dollars on home soil. They estimate that this equates to an exchange headwind of US$12 million. Not ideal, but certainly not worrying.


I no longer need to buy a token “substantial” meal to go with my pint with the owner whispering in my ear *pssst, leave some pasta on your plate so I can keep serving you*. Finally, life is almost like something akin to 2019 when #okboomer was all the rage and one guy’s viral disdain for dating apps was the biggest bear case for Tinder.

However, things in Japan and Korea are still rather regimented, making their $1.73 billion acquisition of Seoul-based social network Hyperconnect more of a drag on the bottom line than a love affair. initially considered. At a time when the company’s headcount continues to grow to accommodate the growth seen in portfolio brands such as Hinge and Tinder, Hyperconnect is putting the brakes on otherwise vibrant exchanges.


After Match Group acquired Tinder (the biggest asset in the MTCH portfolio) in 2017, a costly dispute ensued over Tinder’s valuation. Sean Rad and other original founders have argued that Match Group provided false information about Tinder’s future potential, leading the banks responsible for Tinder’s valuation to assign it a $3 billion valuation. US, a far cry from Rad’s US$13 billion figure.

After several years, it finally culminated in a case that went to trial in November of last year in the New York Supreme Court.

Fortunately, their dispute is now settled, with Match Group having agreed on a final amount of $441 million to be paid to the founders of Tinder. While this figure was considered and will be reflected in their first quarter (Q1) 21 earnings release, the spiraling legal costs to arrive at this settlement have been very much felt in this recent revenue loss.

Many of the issues mentioned above can be categorized as isolated one-time incidents. The current situation with Covid-19 related variants appears to be one of decentralization rather than evolution. Match Group itself believes that the restrictive lifestyle trends in its relevant Asian markets will ease in the second half of this year, similar to other developed global markets such as the United States and the United Kingdom. United.

With the stock price now down 38% from its October 21 highs at US$175, one wonders how much more declines can be assessed as so many of their key performance indicators continue to grow. at an impressive pace?

The positive points

Finally, the good parts and there are many that I am happy to report.

I’ll start with those “city analysts” I mentioned earlier;

We believe MTCH is well positioned as the global leader in online dating, which remains early in the online transition with approximately 25% of global singles using online dating products. We estimate that MTCH has a share of around 50%+ of global online dating users, with its biggest brands including Tinder,, Meetic, OurTime, PlentyofFish, Pairs and Hinge. Tinder is the most downloaded and highest-grossing dating app in the world, and we believe it’s on a solid trajectory with significant room for additional payer penetration.

– Cory Carpenter, Internet Equity Research at JP Morgan

What really surprised me about the above paragraph from Mr. Carpenter is that only 25% of single people use dating apps. Provided Tinder Swindler hasn’t scared off all single women, there’s clearly still a huge potential market for Match Group.

While the organization suffered some unfortunate one-off items in its fourth quarter 2021 results that I’ve highlighted before, I never like to judge a company on a soft quarter. Dig a little deeper and you can see that the business is absolutely thriving on a revenue basis, to say the least.

Growth of

More importantly, a return to profitability is in sight with Match Group forecasts suggesting it will report earnings per share of $2.60 for 2022 and another $3.31 for 2023.

Check out the other key ending bars and the story improves. The number of singles who want to pay for special in-app features, like unlimited swipes for example, is now 16.2 million, and for those paying customers, earnings per person can be as high as $16.60.

Importantly, this revenue of $16.60 per payer has steadily increased each quarter for the past eight quarters.

The company is obviously growing at a very healthy pace in all areas you’d like to see, but the short-term elements are still keeping the stock price in the doldrums, and that may be where the opportunity.


You could literally stick your pin in any NASDAQ-listed stock right now and find a depressed valuation. Some more than others, some less.

Even as recently as December 2020, you would find that Match Group was trading at 17 times its price-to-sales (P/S) ratio. Looking back, you’d say that number is a little frothy, and as your politically incorrect uncle will tell you, times were different back then. It’s not December 2020 and the NASDAQ isn’t hitting new all-time highs every week with a QE rocket at its back… Anyway, I digress.

The times are indeed different and Match Group now finds itself valued on a low X10.2 price-to-sales ratio. An unfair touch given the performance of the underlying business, and it might be fairer to apply a higher P/S valuation provided it can return to profitability and revenues grow in line with their forecasts.

Applying their 5-year P/S average of 12.43 to expected 2022 earnings, I come out with a share price of US$152, but I must stress that I am not giving Match Group a target explicit pricing as such, but simply employing a loose calculation of the price-to-sales ratio relative to their historical average.

Looking at JPMorgan’s more comprehensive valuation approach, they come in at US$165 per share.

“Our December 22 price target of US$165 is based on 35x our 2023E EBITDA of US$1.5B, which assumes no potential positive impact from App Store fee reductions, which, in our view, is justified given MTCH’s industry-leading market share and best-in-class margin profile.”


This is an incredibly tough time for investors and at a time when sentiment seems to be deteriorating weekly and Putin has now crossed Ukrainian borders, it takes a brave individual to keep buying the dip. Fortunately, some of us are able to withstand stock market corrections better than others.

Buying growth stocks right now is hotter than a discounted hot pot set, but that doesn’t mean it will stay that way forever and generally speaking, buying low and selling high is kind of the heart of stock market investing.

And if you’re about to lose faith, always remember that even Amazon’s mighty stock fell over 94% in the dot com crash despite the company’s key metrics improving across the board. fields.

Not for a moment am I suggesting that Match Group can emulate the extent of Amazon’s success, but similarly, while their stock price has fallen, most of their key metrics continue to improve. Even below their overall quarterly loss of $0.60 per share, core business earnings were $232 million (a new record for the company).

It is important to remember that the stock is not the company and the company is not the stock and although the stock price may eventually stray further in the short term, it will the underlying performance of the business that will ultimately dictate the direction of the stock price over the long term. term.

Match Group Inc is indeed successful in the areas you would like, but the risks are always present. Ideally, the items that have dragged them into the red since their last trimester are one-offs, but that’s not to say we’ll never see another Covid-19-related variant ruin real social interaction later on; and there’s the trade-off – do you, the reader, see the world fully recovering from a pandemic lifestyle? If so, it makes the path to profitability much easier for Match Group and is perhaps a nice addition to a growth portfolio.

If you enjoyed this article and want to start your investment journey, do not hesitate to open your account at or contact me personally at [email protected] if you have any questions.

Important Notice: When you invest in stocks, your capital is at risk. The value of the investment and any income from it may go down as well as up, so you may get back less than your initial investment.

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