Match Group (MTCH), the owner of the popular dating app Tinder, is facing pressure from activist investor Starboard Value LP. According to the Wall Street Journal’s report, Starboard has acquired over a 6.5% stake in Match and is pushing the company to improve profitability or consider a sale. Following the news, MTCH stock gained about 9% in the extended trading session yesterday.
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It’s worth noting that in March 2024, another activist investor, Elliott Investment Management LP, acquired a substantial stake in Match and appointed two new members to the company’s board.
Match’s Struggles and Starboard’s Vision
Starboard is demanding changes due to Match’s underperformance. MTCH’s stock price has dropped about 34% in the past year, reflecting concerns about slowing user growth, rising competition, and elevated costs.
The hedge fund’s founder, Jeffery Smith, believes Match can significantly improve its performance. He pointed out that a lack of innovation has caused a steady decline in paying users on its core platform, Tinder, which generates more than half of the company’s revenue.
To address these issues, Smith suggested that new product innovation at Tinder, along with cost-cutting measures and a focus on share buybacks, could enhance Match’s growth rate and profitability. Furthermore, he suggested that the company should consider going private if it fails to implement these changes.
Is MTCH a Good Stock to Buy?
Wall Street is cautiously optimistic about Match’s prospects. With 12 Buys and eight Hold recommendations, the stock has a Moderate Buy consensus rating. The analysts’ average price target on MTCH stock of $37.94 implies 18.49% upside potential from current levels.
