Nomura Remains Bullish On Match Group Despite Q4 Miss

Match Group Inc MTCH reported disappointing revenue for the fourth quarter of 2019 due to increased Tinder churn resulting from changes to the cancellation flow in the new iOS 13.

The iOS cancellation issues will abate and estimates may be revised higher as the year progresses, according to Instinet.

The Analyst

Nomura Instinet’s Mark Kelley maintained a Buy rating on Match Group while raising the price target from $81 to $86.

The Thesis

The Tinder churn situation was worsened by Apple Inc. AAPL forcing users to upgrade their operating system in late December, Kelley said in the note.

He added, however, that Tinder had delivered strong results in 2019, with 39% year-on-year growth in direct revenue in the fourth quarter.

Although the iOS cancellation flow impact may continue into the first quarter of 2020, it would ease after that, Kelley said. He added that the 2020 guidance indicates another 1 million subscribers being added.

The analyst further mentioned that growth at Tinder in 2020 is likely to be at par with 2019 in dollar terms, although it may be backend loaded, with new a la carte items being rolled out, which boosts average revenue per user.

“The non-Tinder brands remain a focus and are expected to contribute to revenue growth, especially at Hinge, which is expected to be near breakeven in 2020,” Kelley wrote.