Proactive Investors - Ahead of the Match Group Inc (NASDAQ:MTCH) earnings on Tuesday, shares in the Tinder and Hinge owner have been recovering from the all-time low that followed its disappointing quarterly numbers in the fall.
This quarter's results come fresh on the back of activist investor Elliott Investment Management taking a $1 billion stake to become one of the group's largest shareholders.
Elliott's involvement is a response to Match Group's shares plummeting 80% from pandemic highs, as the company grapples with challenges in driving growth and attempts to introduce paid features on its apps.
Analysts at Jefferies said fourth-quarter performance of Tinder was weaker than anticipated, with global downloads declining by 11% year on year, a trend that is likely to result in a decrease of about 340,000 paying subscribers, but improving slightly in the first quarter of 2024.
Hinge is the bright spot, say the analysts, with downloads up 23% and expected by management to grow revenue 40% this year.
"We expect Elliott to focus on accelerating Tinder's user and payer growth," say the Jefferies team. "Unlike a traditional activist candidate where cost savings and capital returns are the focus, we believe Elliott should be more focused on improving Tinder's user growth trajectory."
They expect Elliott to pursue a seat on Match's board try and encourage the company to prioritize Tinder product innovation, "which has been lacking over the last several years".
UBS, meanwhile, said it was "modestly more constructive" after the Apple (NASDAQ:AAPL) App Store changes announced last week and said it could lead to Match raising its 2024 margin outlook alongside these earnings.
The Swiss bank estimates that Match generates around 28% of its total revenue from Europe, around $1 billion, of which roughly 80% is mobile and 2/3rd is via Apple.
Match's effective App Store fee could fall to around 21% from 30% in EU, analysts calculated, giving a boost to profit margins.