Shares of the dating site company Match Group (NASDAQ:MTCH) stock jumped 7% overnight after activist investor Starboard Value announced it has a 6.5% stake.
Starboard wants Match to sell itself and go private if it can’t quickly innovate and increase margins.
Match owns several dating sites, the best known of which is Tinder. It also owns OKCupid, Our Time, Hinge, and the original Match.com.
Match opened this morning at about $34.22 per share. That’s a market capitalization of about $8.4 billion on an estimated 2024 revenue of $3.4 billion. Shares are down 12% in 2024 and 34% over the last year.
Not Enough Fish
One of Match’s sites is called Plenty of Fish. Its problem is that there aren’t enough fish (or people) willing to trust their social lives to its dating services.
Starboard’s proposal suggested CEO Bernard Kim reduce payer declines at Tinder and cut costs to raise operating margins by 40%. It wants more free cash flow dedicated to share repurchases.
Match was spun out of its former parent, IAC Interactive (NASDAQ:IAC), in mid-2020. At the time Match was selling at about $100 per share.
The deal was a “controlling shareholder transaction” in that IAC controlled Match and dictated the terms. A Delaware Chancery Court recently rejected IAC CEO Barry Diller’s effort to streamline such transactions, upholding a legal framework requiring heightened scrutiny on behalf of minority shareholders.
The FTC found before the spin-off that 25-50% of Match’s members were using the site to perpetrate scams. One victim profiled by CBS was reportedly robbed of $2.5 million before drowning.
CEO Bernard Kim reportedly responded to lawsuits that “things happen in life.” Podcast host Jay Shetty was recently named the site’s “relationship advisor,” hoping to improve the user experience.
MTCH Stock: What Happens Next?
MTCH stock may get a short-term bump, but the Starboard letter shows the business has long-term problems.
On the date of publication, Dana Blankenhorn 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
