Match Group - Quick Peek

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MusiCali brought this to the board earlier today and I was just getting ready to look at it based on a poster on the SA Options board (I believe it was J Sargent).

Match Group is an on-line dating company with 45 different products (websites/apps) most notably Match.com and even more importantly, Tinder. Tinder seems to be driving all of the growth and is now around 40% of revenues. I’ll note the revenue growth isn’t stellar, but it is just beginning to pick up.

Revenues this quarter came in at $379M growing 28%. Not too heady around these parts, but that was a big tick up in growth. Prior three quarters from most recent: 19%, 12%, 15%.

This was a Peter Lynch type of consideration in that I only wanted to look at the stock because I know about Tinder (the online dating/hook up app). It is definitely popular. How popular and how long lasting it will be is another story. If anyone watches the HBO series Shameless, you may know of it. If you don’t watch Shameless, consider that if nothing else in this post.

The company is profitable, but earnings have been slowing and this is attributed to “In-app purchase fees” which you can read as, “payments to Apple or Google.”

Whether Match Group is successful seems to hinge on Tinder. They certainly have other competitors in the market place and others that are likely to pop up.

Here’s the deal. People will always want options to meet the opposite sex. Tinder seems to be offering a way to do that and monetize it. If it becomes the gold standard, then it could be an incredible investment. That is a big if, though!

Any other takers on this subject?

A.J.

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Any other takers on this subject?

Just a small anecdotal.

Recurring income.

To use match you become a member at a monthly fee. (Not sure if this is also true for tinder.) My brother used the service for several years. (Match, not tinder.) He had a profile up that women could look at and contact him, and he as well could search for women he might like to meet. Went out for lunch or coffee or a date now and then but did not make any long term connections. For a while he didn’t want to “go silent,” not try to meet women on sight or have women interested in him contact him. But he didn’t want to leave altogether sure he’d be want to put his profile back in play when he was feeling more up to the dating scene. So he just made his profile inactive so it was unseen, but continued to pay the $59 a month his card was charged for months.

okapimoon

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Hi Phoolio,
Thanks so much. I am honored that you took the time to add to the conversation regarding MTCH.
Ya, I like MTCH but haven’t been able to pull the trigger again.
I have pretty much all my single stock $ in ANET, SHOP and SQ right now. Haven’t been able to bring myself to diversify away from these esp. ANET and SHOP are just monsters.
I will have to keep thinking about it…

“If it becomes the gold standard, then it could be an incredible investment. That is a big if, though!”

I do think it has a good chance of this although it looks like Bumble may be a threat…
There were some things online recently about MTCH buying bumble but I haven’t heard anything in a few weeks about that…

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although it looks like Bumble may be a threat…

Have heard the same, MusiCali.
And it begs the question how durable Tinder’s advantage can be which is the biggest problem with investing in the company. The debt is another problem. As far as buying Bumble, that would likely bring on more debt and/or significant dilution.

I suspect competitors will come out of the woodworks. Tinder is a great idea in today’s age, but there doesn’t seem to be much stopping anyone else from doing the same and undercutting the other to help gain a foothold.

Match Group is interesting, but more concerning.

A.J.

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this data from IBD
#11 in its stock group.

Checklist…Rating (not too strong)
Composite Rating 94 Neutral
EPS Rating 44 Fail
RS Rating 98 Pass
Group RS Rating A+ Pass
SMR Rating B Pass
Acc/Dis Rating B+ Pass

EPS % Chg (Last Qtr) -38%
3 Year EPS Growth Rate 9%
EPS Est % Chg (Current Yr) 83%
Annual ROE 39%
Sales % Chg (Last Qtr) 29%
3-Year Sales Growth Rate 13%
Debt % 237%

Yes, not great yet.

top 5 stocks in its stock group
1ATHM AUTOHOME INC CL A ADS
2FB FACEBOOK INC CL A
3GRUB GRUBHUB INC
4WB WEIBO CORP CL A ADS
5YY YY INC

I have a small position in MTCH and don’t intend to add more at the time. I have a slightly larger position in WB and like it better.

P.

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More debt and dilution from buying bumble. Yeeesh! I hadn’t considered that. Thanks so much for your help in taking an objective look at MTCH.
I have gotten burned too many times following a “story” and price action.

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Thanks for sharing that puddinhead

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From this morning
Mtch will offer same women first option as bumble
Smart!

https://www.google.com/amp/s/www.marketwatch.com/amp/story/g…

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Tinder is responsible for all the growth at Match. Tinder Gold, recently introduced at $15/mo has been absolutely killing it. The rest of their dating properties are zero-growth but highly profitable.

Customers are now going from paying nothing to paying for Tinder Plus to $15 for Gold. It is a game-changer.

I don’t understand the concerns about debt when net debt < 10% of market cap.

As you note, Revs growth has gone from 12% to 19% to 28%. That’s pretty amazing for a $12Bn firm.

Cash Flow from Ops rose 35%.

Match is majority owned by IAC which is run by Barry Diller, one of the alltime great CEOs.

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Tinder is responsible for all the growth at Match. Tinder Gold, recently introduced at $15/mo has been absolutely killing it. The rest of their dating properties are zero-growth but highly profitable.

Customers are now going from paying nothing to paying for Tinder Plus to $15 for Gold. It is a game-changer.

I don’t understand the concerns about debt when net debt < 10% of market cap.

As you note, Revs growth has gone from 12% to 19% to 28%. That’s pretty amazing for a $12Bn firm.

Cash Flow from Ops rose 35%.

Match is majority owned by IAC which is run by Barry Diller, one of the alltime great CEOs.

MTCH is up ~15-20% the past 6 months, growth has accelerated to 36% for the past 2 quarters, although that will slow as Tinder Gold YoY comparisons get lapped.

EPS more than doubled YoY. Margins up, deferred revenue up 23%.

FCF more than doubled YoY also.

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MTCH is up ~15-20% the past 6 months, growth has accelerated to 36% for the past 2 quarters, although that will slow as Tinder Gold YoY comparisons get lapped.

EPS more than doubled YoY. Margins up, deferred revenue up 23%.

FCF more than doubled YoY also.

https://www.fool.com/investing/2019/05/08/why-match-group-st…

Match up another 40% since this post. Stock has doubled since OP.

Net income rose 27% this Q. EPS beat by 9c. FXN Rev up 18% while marketing expense is down 10% over 2 years. That’s leverage.

Tinder had 384k net adds, over 100k over expectations. They are expecting a larger increase in Q2 during what is typically a seasonally slow Q for them.

They expect to have over 1mm net adds this year.

Stock is not cheap but continues to perform well just like the business.

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Tinder is responsible for all the growth at Match. Tinder Gold, recently introduced at $15/mo has been absolutely killing it. The rest of their dating properties are zero-growth but highly profitable.

Customers are now going from paying nothing to paying for Tinder Plus to $15 for Gold. It is a game-changer

Match up another 40% since this post. Stock has doubled since OP.

Net income rose 27% this Q. EPS beat by 9c. FXN Rev up 18% while marketing expense is down 10% over 2 years. That’s leverage.

Tinder had 384k net adds, over 100k over expectations. They are expecting a larger increase in Q2 during what is typically a seasonally slow Q for them.

They expect to have over 1mm net adds this year.

Stock is not cheap but continues to perform well just like the business.

'Match Group Inc. (MTCH) on Tuesday reported second-quarter profit of $128 million. On a per-share basis, the Dallas-based company said it had profit of 43 cents. Earnings, adjusted for stock option expense, came to 49 cents per share.

The results topped Wall Street expectations. The online dating company posted revenue of $498 million in the period, also beating Street forecasts. Six analysts surveyed by Zacks expected $488.6 million.

Match Group shares have risen 73% since the beginning of the year…
The Tinder app reported 5.2 million average subscribers in the quarter, 1.5 million more than last year. Match now expects to add over 1.6 million average subscribers in 2019, above the 1 million the company had forecast earlier.’

Stock is now up 18% in AH trading to $87.50. Another 30% gain since the initial doubling in price mentioned last Q eps.

ARPUs were up 5% FXN, so nice ~18% increase in subs plus price hikes! Expecting 400k sequential additions at Tinder.

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Match Group shares have risen 73% since the beginning of the year…
The Tinder app reported 5.2 million average subscribers in the quarter, 1.5 million more than last year. Match now expects to add over 1.6 million average subscribers in 2019, above the 1 million the company had forecast earlier.’

Stock is now up 18% in AH trading to $87.50. Another 30% gain since the initial doubling in price mentioned last Q eps.

ARPUs were up 5% FXN, so nice ~18% increase in subs plus price hikes! Expecting 400k sequential additions at Tinder.

The predicted spinoff has arrived, at least the plan to do so.

https://www.barrons.com/articles/iac-stock-climbs-on-plan-to…

'Under the proposal, IAC would distribute its Match shares to IAC’s stockholders in a tax-free transaction. As part of the plan, Match Group would eliminate its dual-class common stock structure, with all pre-transaction stockholders receiving a single class of “one share/one vote” Match shares. Pre-transaction IAC stockholders would receive stock in new IAC replicating their current interest in IAC.

“Today IAC proposed an important first step in the separation of Match Group from IAC,” IAC CEO Joey Levin said in statement. “IAC is confident that the proposal communicated to the Match Group special committee provides strong footing for Match Group to begin its journey as a thriving, independent company.”

MTCH is up 78% ytd.

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18 months ago:“Today IAC proposed an important first step in the separation of Match Group from IAC,” IAC CEO Joey Levin said in statement. “IAC is confident that the proposal communicated to the Match Group special committee provides strong footing for Match Group to begin its journey as a thriving, independent company.”

MTCH is up 78% ytd.

Today, JPM: 'Match Group reported strong 1Q results, with strength in the US more than offsetting headwinds from international markets still heavily impacted by the pandemic—namely Brazil, India, & Japan. Tinder growth accelerated to +18% Y/Y (vs. +13% in 4Q), and Tinder net adds of ~200k (vs. ~135k in 4Q) showed healthy improvement. MTCH expects Tinder growth to further accelerate to 20%+ in 2Q. MTCH’s broader portfolio also had a strong qtr.
Non-Tinder growth accelerated to +30% Y/Y (vs. +28% in 4Q)—its best qtr since MTCH’s IPO in 2015—and mgmt believes ~15-20% growth is sustainable over the medium-term. Hinge revenue is expected to double in 2021—after tripling in 2020—with int’l expansion in 2022.’

Stock has more than tripled since OP.

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