Match Group: A Value Trap With Worrying Drop In Paid Users (Rating Downgrade)

Gary Alexander
31.2K Followers
(10min)

Summary

  • Match Group reported very disappointing user results in Q4, with Tinder paid users sharply dropping off and Hinge growth stalling.
  • The company's plan to hit 4-6% revenue growth annually through FY27, as well as $3 billion in FCF over 3 years, seems a tough bar to hit.
  • On top of slowing growth at Hinge, Hinge has a 20-point operating margin deficit to Tinder. Revenue mixing out of Tinder and into Hinge is a headwind to profits.
  • Despite a seemingly attractive valuation at ~11x FCF, Match Group is a value trap due to declining payers, growth, and margins. Sell and invest elsewhere.

Female using a dating app on smart phone

Uwe Krejci

With the stock market continuing to hover near all-time highs, it’s an excellent time for investors to deploy careful stock picking and ditch lower-quality stocks, particularly those with trouble achieving significant growth. In my view, we’re due for a 10-15% correction this

This article was written by

31.2K Followers
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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