What Happened?
Shares of dating app company Match (NASDAQ: MTCH) jumped 10.1% in the afternoon session after the company reported second-quarter results that indicated early signs of a successful turnaround for its key Tinder dating app. The company’s revenue of $864 million remained flat compared to the previous year but surpassed guidance. More impressively, earnings per share crushed analyst expectations. The positive results stemmed from initial improvements in Tinder's user metrics and continued strong operational momentum at the Hinge app. Following the report, Wall Street sentiment improved. JPMorgan lifted its price target to $33, and Goldman Sachs boosted its target to $42. Both firms pointed to the promising product initiatives designed to enhance the Tinder app as a key reason for their optimism.
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What Is The Market Telling Us
Match Group’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for Match Group and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 18.7% on the news that the company reported underwhelming third-quarter earnings that has the market questioning its turnaround story. Match provided revenue guidance for the next quarter which missed analysts' expectations, and its revenue growth was quite weak. The company stated that "Tinder MAU was down 9% Y/Y in Q3, which was the same rate of decline as in Q2, falling short of our expectations for continued improvement in Y/Y trends. From mid-September through October, we saw more press re on new users (registrations and reactivations) than we expected, which has led to pressure on MAU." On the other hand, it was good to see Match Group beat analysts' EBITDA expectations this quarter. Overall, this was a challenging quarter, and the turnaround is frankly not going well.
Match Group is up 13.1% since the beginning of the year, and at $36.90 per share, it is trading close to its 52-week high of $38.62 from October 2024. Investors who bought $1,000 worth of Match Group’s shares 5 years ago would now be looking at an investment worth $323.73.
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