Will the injection of the Elliott fund make customers fall in love with Tinder again?
The activist investment fund Elliott has acquired a billion dollar stake in the capital of Match Group, whose dating apps (including Tinder) are no longer as strong as they once were. Facts, numbers and analyst forecasts
After a cold autumn , shares of Match Group, the group that owns Tinder and other dating sites, such as Match.com, Meetic, OkCupid, Hinge, Plenty of Fish and OurTime, are soaring again. The credit, according to the Wall Street Journal , which spread the news, would be the interest shown by the Elliott Investment Management fund which, by investing a billion dollars, wants to give a new face to the company.
ELLIOTT'S ENTRY ON THE SCENE IN MATCH GROUP
Elliott Investment Management, considered the largest activist investment fund in the world (and behind the Salesforce and Pinterest campaigns), has acquired a roughly $1 billion stake in Match Group with the aim of pushing the company to take steps to improve your performance. According to the WSJ , he also intends to push Match to take steps to raise the share price.
“Our team engages with investors regularly and will continue to work to create great experiences for our users and value for our shareholders,” a Match spokesperson told Reuters .
THE REACTION OF THE STOCK MARKET
On the news of Elliott's entry into Match Group, shares of the company that owns Tinder jumped up to 12% during trading yesterday morning, writes CNBC . The stock pared gains significantly, closing up 3%.
THE (FROZEN) BUSINESS OF MATCH GROUP
As Reuters reports, last October, Match forecast fourth-quarter revenue below market estimates, and a month later its rival Bumble released a similar forecast and reported a 30% decline in shares over the past 12 months.
Match has launched several new features, including weekly subscription plans and new engagement and privacy features on Tinder and Hinge, to boost its growth. It has also acquired or launched dating apps focused on specific communities such as Archer, for gay, bisexual and queer men, and The League, which caters to career people. However, American users do not seem willing for this type of product due to economic uncertainties, which has caused advertisers to reduce their budgets.
The company, the news agency says, is currently valued at around $10.30 billion, following a 12% drop in its share price in 2023 which, compared to the highs reached during the pandemic, has even lost around 80% of their value. As of 2021, the group had a market capitalization of more than $45 billion.
ANALYSTS' FORECASTS
“Some Wall Street analysts remain bullish on Match,” we read on CNBC . In fact, the information site recalls that although in December the stock was named top pick by JPMorgan, which cited among other things Tinder's return to double-digit percentage growth, in November, on the occasion of the company's earnings report third quarter, the company saw a continued decline in so-called Tinder payers. And fourth-quarter revenue forecasts also fell short of expectations.
The analysts then point out that since 2012 Match has had seven CEOs and "this turnover rate is significantly higher than the average duration of a CEO mandate, which is seven years".
For Kevin Tsao , analyst at Bloomberg Intelligence, “the arrival of a great activist manager pushing for change could add pressure to management in terms of defining and achieving KPIs/short-term objectives”, while “in terms of producing long-term changes and positive effects on the company and its products, is less certain”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/primo-piano/liniezione-del-fondo-elliott-fara-di-nuovo-innamorare-i-clienti-di-tinder/ on Wed, 10 Jan 2024 14:35:05 +0000.