Should investors swipe left on dating services provider Match Group, Inc. (MTCH)?
The video-call enabled services that were launched last year were a boon for the company, boosting user engagement and attracting new users despite the pandemic’s impacts across other industries. However, Match Group, whose dating services portfolio includes Tinder, Hinge, Meetic, Pairs, OkCupid, and several other popular dating apps, is currently struggling to fight the growing bearish sentiment on its outlook.
Beyond the mixed Q3 performance wherein the bottom-line slid 8.5% year-over-year while the top-line grew 25%, let’s see what could be causing concern among investors?
Website Traffic Trends
Being an internet-based company, Match thrives on volume to its websites, and thus, insights can be derived from its online traffic. Sourced from Semrush (SEMR), TipRanks’ new Website Traffic tool can help traders look into website traffic volume. After diving into the data, it’s clear that the consolidated traffic trends for the apps owned by Match appear quite dismal.
We found that in Q4, global unique visitors to all the apps owned by Match declined around 66.6% to 38 million, compared to Q3. Furthermore, as a whole, unique visits to its apps fell 4.82% when comparing the year-to-date metric to the same period in 2020.
Experts Cautiously Optimistic
Following Match’s Q3 print, BMO Capital analyst Daniel Salmon maintained a Hold rating on the stock but lowered his price target to $150 from $160.
Salmon believes that Hyperconnect is the most interesting development in Match’s business as the company expands into social discovery. For context, Match acquired Hyperconnect in June this past year for $1.73 billion. He also notes that he will wait for more information on the company’s “thesis,” before making further changes to his stance on the stock.
Nonetheless, Salmon reminds investors that the near-term risk does not always translate to long-term risk.
Turning to the rest of the Street, the stock earns a Moderate Buy consensus rating based on 3 Buys and 2 Holds. At $167.20, the average Match price target implies a 12-month 7.46% upside potential.
Silver Lining
Despite the fall in website traffic, it should be noted that Match Group has recorded top-line expansion for the past three years. Robust momentum from Tinder and strong performances from Meetic, Match.com, and PlentyOfFish are driving Match’s growth.
As of September 30, Match Group had 16.3 million paying users worldwide. Moreover, per recent market data, Tinder was the most downloaded dating app worldwide for the last twelve months ending September 30.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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