Match Group Inc (MTCH): Investor Discussion

On June 8, 2023, DeMatteo Research hosted a discussion on Match Group Inc (MTCH) with four investors. The investors shared thoughts on the current bull and bear theses as it relates to subscriber trends, competition/dating modalities, and existential risk, among other topics. The group agreed on several points but there was some disagreement around Gen Z’s use of Tinder/dating apps, the ability for Tinder to reach DD% growth in Q4, and the long-term outlook for the app. Bulls see a steady grower with new monetization opportunities (Just For You, Archer), while bears question the likelihood of meeting guidance and are worried this may be the next Myspace with little hope of reinvigorating net adds. 

Publicly traded companies mentioned herein: Grindr Inc (GRND), Match Group Inc (MTCH)

Positioning & Business Overview

A MTCH investor started the discussion by explaining that a lot has gone wrong over the past year (growth rates decelerating, management turnover, etc.), but the stock has been overly punished for these issues and is undervalued at current levels. The growth rate has decelerated, but that isn’t because of a new competitor taking meaningful market share or a new modality of dating that is displacing MTCH. In a worst-case scenario consistent with the core bear thesis of TAM saturation in the US, he would expect topline growth in the HSD% range (instead of the historical teen rate) and would hope for management to realize 70bps – 100bps of margin expansion annually, creating a mid-teen% FCF growth story for a stock trading at a ~10% FCF yield.