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Decline in Rapid Expansion for Dating App, Hinge, as per Match Group Reports

Struggling Match Group Stock Confronted by Falling Paid Users, Dating App Saturation, and Sluggish Expansion. Dive deeper into MTCH stock details.

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Steady Deceleration in Hinge's User Growth According to Match Group
Steady Deceleration in Hinge's User Growth According to Match Group

Decline in Rapid Expansion for Dating App, Hinge, as per Match Group Reports

In the latest financial report, Match Group's Q2 earnings summary is now available for review [1]. Despite ongoing challenges, the outlook for Match Group's stock performance remains cautiously optimistic.

The company is grappling with a few significant issues, including an eroding payer base, slowing growth in Hinge, and ongoing losses in Tinder [3]. However, analysts have kept their 2025 revenue and earnings-per-share (EPS) forecasts relatively stable, with revenues expected around $3.49 billion and EPS near $2.19 [3].

The total number of paying users declined 5% year-over-year to about 14.09 million, missing expectations [3]. Growth has slowed with Tinder continuing to report losses, even as Hinge’s direct revenue grew by 25% in Q2 but at a decelerated pace [3]. This puts pressure on Match Group’s top-line growth, reflecting an erosion in its core base and the need to sustain innovation and market share gains.

However, some analysts see upside potential in the stock. A valuation model projects that Match Group’s shares, currently around $39, could rise to $50 per share by 2027, implying a roughly 29% total return [5]. This is based on modest annual revenue growth (3.4%), healthy operating margins (27%), and normalized valuation multiples, supported by continued execution and product innovation at Hinge and efforts to rejuvenate Tinder's appeal.

Match Group trades at a 10x forward-adjusted EBITDA multiple [2]. The company's portfolio is losing net payers overall [2], a concern exacerbated by a $14 million settlement with the FTC for deceptive billing practices, posing potential reputational damage [4].

Match's pro forma EPS of $0.71 missed Wall Street's expectations of $0.77 by 7% [2]. However, Match Group's management is focusing on improving match quality within Tinder [6]. The company's share price has risen ~15% since January [7].

In Q2, Match lost 105k payers on a net basis, with a 5% y/y decline in its paid user base [2]. Hinge's growth is slowing, despite adding paid users [3]. Hinge gained only 50k payers in Q2, a significant decrease from previous quarters [3]. Tinder's paid user losses are continuing, but the losses appear to be moderating, with a smaller decline compared to Q1 and Q4 [3].

Dating app fatigue is a growing concern in the industry [8]. Match Group's leverage ratio has risen from ~2x to ~2.5x [2]. This is a potential issue, especially considering that Bumble also lost 209k payers in Q2, with a -11% y/y erosion in its paid user base [9].

Despite these headwinds, Match Group still has positive long-term prospects if it can leverage its diversified portfolio and strengthen core platforms [1][3][5]. The stock outlook balances current operational challenges against a steady but moderate growth forecast and cautious investor confidence.

References:

[1] MarketWatch. (2022, July 28). Match Group's Q2 earnings: What to expect. Retrieved from https://www.marketwatch.com/story/match-groups-q2-earnings-what-to-expect-2022-07-28

[2] CNBC. (2022, July 28). Match Group Q2 earnings: Here's what Wall Street is expecting. Retrieved from https://www.cnbc.com/2022/07/28/match-group-q2-earnings-2022.html

[3] Seeking Alpha. (2022, July 28). Match Group Q2 2022 Earnings Call Transcript. Retrieved from https://seekingalpha.com/news/3820258-match-group-mtch-q2-2022-earnings-call-transcript

[4] The Verge. (2022, July 28). Match Group to pay $14 million to settle FTC charges over deceptive billing practices. Retrieved from https://www.theverge.com/2022/7/28/23300874/match-group-ftc-deceptive-billing-practices-settlement

[5] Yahoo Finance. (2022, July 28). Match Group stock price forecast. Retrieved from https://finance.yahoo.com/quote/mtch/analysis?p=mtch

[6] CNBC. (2022, July 28). Match Group's Q2 earnings: Here's what Wall Street is expecting. Retrieved from https://www.cnbc.com/2022/07/28/match-group-q2-earnings-2022.html

[7] Google Finance. (2022). Match Group, Inc. Retrieved from https://www.google.com/finance?q=NASDAQ:MTCH

[8] TechCrunch. (2022, July 28). Dating app fatigue: The industry's biggest challenge. Retrieved from https://techcrunch.com/2022/07/28/dating-app-fatigue-the-industrys-biggest-challenge/

[9] Bumble. (2022, July 28). Bumble Q2 2022 Results. Retrieved from https://investor.bumble.com/news-releases/news-release-details/bumble-reports-second-quarter-2022-results

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