Match Group (MTCH) – Activist – January 13, 2024
It’s no secret: I was very disappointed in Match Group’s most recent quarter. The lengthier journey to fixing top of funnel traffic and the inexplicable pause in a successful marketing campaign powered that opinion. Match Group is a dominant market share leader in an online dating market poised to grow well in excess of global GDP. It owns arguably the two most valuable brands in the space in Tinder and Hinge (Bumble is in that conversation too). It has an unmatched first party dataset to guide product perfection and to borrow insight/tech to debut newer apps (such as Archer) at lower cost. It is battle tested against mega-cap tech (Meta tried and mostly failed to enter the dating space). This is why I’ve been so patient with the name as other exogenous factors like an abnormally strong dollar (until recently) have weighed heavily on its global growth.
Despite all of the secular tailwinds, execution was poor under old leadership and has been inconsistent with the new team. So? This is the perfect candidate for an activist investor. It’s the holding that I think has the most pressing need for an activist to steer the ship. Enter Elliott Management. This week, news of a nearly 10% ($1 billion) stake in the company broke. It’s not yet clear what Elliott wants to see change, but I’m sure they’ll have many requests including board representation. I’d personally love to see a CFO change. Whether that’s changing capital allocation preferences, shifting focus on its app portfolio or even pushing for an outright sale, this is good news for shareholders.
Source: Brad Freeman proprietary research
