Match Group (NASDAQ:MTCH), the company behind popular dating apps like Tinder, is in focus today on reports that activist investor Elliott Investment Management has started to build a stake in the firm. Led by billionaire Paul Singer, Elliott is known as an “activist investor” and often pushes companies to implement significant changes. MTCH stock is up about 3% on the news as of this writing.
Elliott has obtained a stake of roughly $1 billion in Match Group, Barron’s reports, citing unnamed sources. Further, the activist investor intends to suggest steps that Match can take to help boost MTCH stock. Shares of MTCH were down nearly 16% in the last year heading into today and had tumbled about 78% from the stock’s 2021 high.
Match Faces Challenges
Facing tough competition and many single consumers who have been hurt by high inflation, Match’s dating apps have had their share of struggles lately.
According to Reuters, the revenue of Match’s largest app, Tinder, increased by only 7% last year. Conversely, major competing app Bumble (NASDAQ:BMBL) “expanded its top line at twice that rate.”
For the fourth quarter of 2023, Match expects revenue to come in between $855 million and $865 million. That is well below analysts’ average estimate of about $894 million, per Seeking Alpha.
Wells Fargo Is More Upbeat on Bumble Than Match
In a note to investors last month, Wells Fargo wrote that Bumble’s share of early-stage users was increasing, mostly because Tinder was “underinvesting on marketing,” As a result, Tinder’s share of these users has been dropping. Additionally, although another Match Group app, Hinge, has benefited from an increase in its share of early-stage users, those gains appear to have come at Tinder’s expense.
Wells Fargo started coverage of MTCH stock with an “equal weight” rating while also beginning coverage of Bumble with an “overweight” rating.
Elliott’s Potential Approaches
Looking forward, Elliott and Singer may heed Well Fargo’s advice and seek to boost Tinder’s spending on marketing. Alternatively, the activist investor may use a more conventional approach and push the company to cut on spending.
Either of these methods may be able to boost MTCH stock over the longer term.
On the date of publication, Larry Ramer did not hold (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.
