What Happened?
Shares of dating app company Match (NASDAQ: MTCH) fell 6.5% in the morning session after the company provided underwhelming guidance during its Investor Day 2024 session. Factoring in foreign exchange (FX) rate fluctuations, the company expects Q4 sales and Tinder's direct sales to fall below the outlook shared during its Q3 2024 earnings update. However, Match reiterated Adjusted operating income margin of 36% for the full year 2024, which is more reassuring, Management explained that Tinder's new user sign-ups on Apple iOS have stabilized at lower levels but haven't rebounded to the trends seen in early September.
Separately, the company reiterated the focus on returning value to shareholders by announcing a quarterly dividend of $0.19 and authorizing a $1.5 billion stock buyback program. The stock's reaction suggests investors are more focused on the underwhelming guidance, which could result in Wall Street resetting near-term expectations of the business.
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What The Market Is Telling Us
Match Group’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about a month ago when the stock dropped 18.7% on the news that the company reported underwhelming third-quarter earnings that had the market questioning its turnaround story. Match provided revenue guidance for the next quarter which missed analysts' expectations, and its revenue growth was quite weak. The company stated that "Tinder MAU was down 9% Y/Y in Q3, which was the same rate of decline as in Q2, falling short of our expectations for continued improvement in Y/Y trends. From mid-September through October, we saw more pressure on new users (registrations and reactivations) than we expected, which has led to pressure on MAU."
On the other hand, it was good to see Match Group beat analysts' EBITDA expectations this quarter. Overall, this was a challenging quarter, and the turnaround is frankly not going well.
Match Group is down 14.5% since the beginning of the year, and at $31.15 per share, it is trading 20.2% below its 52-week high of $39.04 from January 2024. Investors who bought $1,000 worth of Match Group’s shares at the IPO in June 2020 would now be looking at an investment worth $294.74.
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