Market Dumps Match Group Despite Q3 Beat

Shares of Tinder parent company Match Group Inc MTCH fell 17 percent Wednesday after the company released its third-quarter print the previous afternoon. 

The online dating company reported Q3 adjusted earnings of 39 cents per share, beating estimates by 3 cents. Sales came in at $443.943 million, beating estimates by $7.323 million.

The Analyst 

Wells Fargo analyst Robert Coolbrith maintained a Market Perform rating on Match Group. 

Aegis Capital Corp. analyst Victor Anthony maintained a Buy on Match with a $65 price target. 

Wells Fargo: Organic Investment, M&A Remain A Priority 

Tinder remains Match’s biggest catalyst moving forward. Tinder direct revenue grew roughly 100 percent year-over-year in the quarter, driven by 61-percent growth in the average paid member count and 24-percent average revenue per user growth, Wells Fargo's Coolbrith said in a note. 

“Gold continued to increase its penetration of Tinder subscribers in the quarter, while management noted that the global roll-out of Picks has enhanced the attractiveness of the Tinder Gold offering,” the analyst said. 

Match will maintain significant flexibility for organic investment and M&A, which remain key priorities, according to Wells Fargo. 

Aegis Bullish On Tinder's Growth 

“Tinder’s momentum clearly continues and there is ample room to grow sub penetration of MAUs,” Aegis Capital's Anthony said in a note. 

Match announced a special $2 dividend in the quarter. The reasoning for the cash return is unclear, as Match indicated that cash flow would be used for M&A and steady repurchases, the analyst said. 

Outside of the dividend surprise, Anthony said to buy Match on weakness, as Tinder subscribers are growing at a strong pace and non-Tinder subscribers are stabilizing.

“Tinder has grown rapidly and we expect that it will continue to grow at a fast pace." 

Price Action:

Match shares were down 17 percent at $42.72 at the close Wednesday. 

Related Links:

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Photo courtesy of Tinder.