Match Group (NASDAQ:MTCH) isn’t on fire today. In fact, the company that owns the world’s largest portfolio of dating apps is falling hard after its recent earnings report. MTCH stock has seen a highly volatile month, but yesterday’s earnings report sent it down 17% today despite a slight attempt at a rally.
The stock’s current trajectory, though, indicates shares are likely to continue trending downward. While the company reported revenue growth of 12%, it still came in behind Wall Street’s estimates. But even more troubling is the $31.9 million net loss where analysts were expecting to see a profit of $156.5 million.
These numbers raise an important question: has Wall Street lost confidence in dating apps? Let’s take a closer look at what caused the flame to go out at Match Group.
What’s Happening With MTCH Stock
With MTCH stock falling today, it is important for investors to take a macro perspective when assessing the company. Match Group is by far the most dynamic company in the digital dating space. Its holdings include popular apps Tinder, Match, Hinge, Meetic and OkCupid. When the Covid-19 pandemic placed a temporary hold on in-person dating, these apps faced an uncertain future.
Two years later, it’s clear that while dating has resumed, some consumer habits haven’t swung in the favor of the digital dating industry. “While people have generally moved past lockdowns and entered a more normal way of life, their willingness to try online dating products for the first time hasn’t yet returned to prepandemic levels,” states Match Group CEO Bernard Kim.
Kim is working hard to turn things around for Match. Recently, the company announced that Tinder CEO Renate Nyborg would be departing from the company. TechCrunch reports the popular dating app’s management team will be reorganized and will include several Match Group veterans. The outlet also notes that “Reading between the lines, there was also a hint that the younger generation of users may have lost its appetite for dating apps like Tinder.”
While that may be true, Tinder’s peers outside the Match family aren’t struggling so much. Fellow dating app Bumble (NASDAQ:BMBL) is down today, but it rose 11% in July while MTCH stock fell by 14%. This suggests the problem has much more to do with Match as a company than with dating apps in general.
What Comes Next for Match Group
One thing is clear regarding the digital dating industry: companies have agreed the future of dating isn’t in virtual experiences. In November 2021, Match Group unveiled plans for bringing dating to the metaverse. This week also brought news that these ambitions have been significantly reduced. Kim notes the uncertainty of a metaverse dating initiative, stating that the company will “consider moving forward at the appropriate time.”
However, it is just as likely such a time will never come. In April 2022, MTCH stock soared on rumors that Meta Platforms (NASDAQ:META) would be acquiring Match Group. The fact that nothing came of it suggests the tech giant isn’t focused on merging dating and the metaverse.
All told, it’s easy to see why investors are no longer excited by MTCH stock. The company is in reorganization mode, but until it shows actual signs of long-term growth potential, Wall Street won’t be excited. The future of digital dating isn’t necessarily unclear, but the future of Match Group certainly is.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
