Ken Gawrelski, an analyst from Wells Fargo, maintained the Hold rating on Match Group (MTCH – Research Report). The associated price target is $31.00.
Ken Gawrelski has given his Hold rating due to a combination of factors surrounding Match Group’s current performance and potential future strategies. The analyst recognizes that Match Group, particularly through its Tinder platform, faces significant secular headwinds and has yet to demonstrate a turnaround in user growth, as evidenced by the year-over-year and quarter-over-quarter declines in global monthly active users. Despite seeing a modest acceleration in app downloads compared to the previous quarter, the overall downward trend and upcoming tougher comparisons suggest challenges in showing additional progress in the near term.
Furthermore, Gawrelski posits that increasing Tinder’s marketing investment could be the most effective path to value creation for Match Group. He notes that Tinder currently allocates approximately 10% of its revenue to marketing, significantly less than its competitor Bumble, which spends around 25%. Increasing marketing spend to a similar level could initially impact EBITDA negatively, but the potential for multiple expansion might offset this. The report also explores a take-private scenario, considering Match Group’s existing leverage and the significant equity financing that would be required for such a transaction. Additionally, Gawrelski evaluates other financial strategies, such as increasing financial leverage, but views them as less favorable compared to ramping up marketing investments or considering privatization.
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Match Group (MTCH) Company Description:
Texas-based Match Group is an online dating service company and provides dating products worldwide. The company has a vast portfolio of online dating services including Tinder, Match.com, OkCupid, PlentyOfFish, Meetic, among other brands.
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