Dating opportunities?
- MTCH down nearly 20% intraday on Thursday
- Stock down more than 75% from 2021 record high
- Slowdown in online dating a reversible trend?
This week may have been dominated by an election and a Fed meeting, but it’s also the busiest week of the earnings season.
And there have been plenty of notable moves, including Match Group’s (MTCH) sell-off on Thursday:
Source: Power E*TRADE (For illustrative purposes. Not a recommendation. It is not possible to invest directly in an index.)
After closing near $38 on Wednesday, shares fell as far as $30.61, not too far removed from their early-May low of $27.66, which was the stock’s lowest level since 2017.
While MTCH topped headline earnings estimates, it missed revenue forecasts, and—probably more significantly—came up short on its forward guidance.1
The company’s weak outlook appeared to be symptomatic of a larger malaise in the online dating space. Just two days earlier, Morgan Stanley & Co. strategists discussed the evident slowdown in the online dating market, with dating app usage (by singles actively looking for relationships) down 15% and US industry revenue growing just 1% this year.2
A comparison chart of MTCH and another dating app, Bumble (BMBL), illustrates the rough road the industry has traveled in recent years. Since February 2021, when BMBL began trading and several months before MTCH hit its record high of $182, both stocks have fallen more than 75%:
Source: Power E*TRADE (For illustrative purposes. Not a recommendation. It is not possible to invest directly in an index.)
So, was MTCH’s earnings sell-off just the latest in what has been a long line of bearish signals? As the analysts see it, the question is whether these trends point to a fundamental shift away from online dating, or are the result of a lack of innovation within the industry, which could be reversed by improved products. The former argument would suggest these stocks aren’t likely to emerge from their bear markets any time soon, while the latter leaves room for long-term upside.
In making their case for the “fixable” outlook, the analysts point out that many of the major dating apps have stayed relatively unchanged over the past five to 10 years, and aren’t catering to the demands of today’s users. They also note that the platforms that have consistently improved their user experiences have recently performed much better.
Market Mover Update: Baxter (BAX) is scheduled to release earnings today before the opening bell. Yesterday, it was near the top of the LiveAction scan for unusual put volume. The big trades: 7,600 contracts in the November $35 puts (vs. open interest of 2,400), and 2,400 of the $35 puts expiring today (vs. open interest of 154).
Gold prices rebounded on Thursday after suffering their second-biggest down day of the past three years on Wednesday. December gold futures (GCZ4) rallied more than 1% to push back above $2,700.
Today’s numbers include: consumer sentiment (10 a.m.).
Today’s earnings include: Baxter (BAX), Ubiquiti (UI).
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1 StreetInsider. Match Group (MTCH) Tops Q3 EPS by 3c, Guidance Misses Consensus. 11/6/24.
2 MorganStanley.com. Why Are Users and Investors Breaking Up with Online Dating? 11/5/24.