Stock Story -
What Happened: Shares of dating app company Match (NASDAQ:MTCH) jumped 13.3% in the pre-market session after The Wall Street Journal reported that Elliott Investment Management acquired a significant stake of about $1 billion in the company (a nearly 10% position prior to the move). The hedge fund plans to engage with Match Group (NASDAQ:MTCH) to enhance its stock performance just as the market seems worried about declines in paying customers. This move is notable given Elliott’s track record for activist campaigns that often bring about significant changes in target companies, focusing on aspects like improving asset monetization, expense efficiency, and stock buybacks among other changes.
In our December research report exclusive to members of StockStory Edge we took a firm view that the market was misunderstanding MTCH’s subscriber decline and was too negative on the stock. Our research showed that given Match Group’s dominant brands and scale, the company could not only grow paying customer numbers again but also better monetize other assets. It is comforting that another professional investor in Elliott is likely seeing what we saw just last month and we are expecting more to follow in the future.
Is now the time to buy Match Group? Access our full analysis report here, for one day only we are opening it to public for free.
What is the market telling us: Match Group's shares are quite volatile and over the last year have had 16 moves greater than 5%. But moves this big are very rare even for Match Group and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 2 months ago, when the stock dropped 9% on the news that the company reported third quarter results. Revenue beat analysts' expectations, driven by better-than-expected ARPU. That growth, however, was offset by year-on-year subscriber churn. This churn can be attributed to management's significant price increases, a new strategy the team implemented at the start of the year. Its subscribers did increase sequentially, however, showing that the initial shock from Match's price increase could be stabilizing. Management has also taken measures to make the company more efficient, enabling it to beat Wall Street's adjusted operating income and EPS estimates. Looking forward, Match's revenue guidance for the next quarter underwhelmed. Overall, the results could have been better but show glimpses of hope that the company's turnaround strategy is working.
Match Group is up 18.1% since the beginning of the year, but at $43 per share it is still trading 20.5% below its 52-week high of $54.12 from January 2023. Investors who bought $1,000 worth of Match Group's shares at the IPO in June 2020 would now be looking at an investment worth $406.93.
