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Match Group's Tinder Sees Continued Decline in Paying Users Amid $1 Billion Share Buyback Plan

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Ticker Tea
January 31, 2024

đź’¬ STOCKS MENTIONED: $MTCH

đź“ť SUMMARY: Match Group Inc. ($MTCH) disclosed in its latest earnings report a continued downward trend in its flagship product, Tinder. The number of paying users on Tinder has decreased for the fifth consecutive quarter, with an 8% year-over-year decline, bringing the total to just under 10 million. This drop exceeded the forecasted 6.6% decrease predicted by analysts. Match attributes this decline to the introduction of more expensive subscription plans last year, coupled with a general decrease in new daily users.

Despite this setback, Match's fourth-quarter earnings surpassed expectations, reporting $866.2 million in revenue and an 81-cent profit per share. In response to these financial results and the ongoing challenges, the company announced a $1 billion share buyback plan. This strategic move comes at a time when Match is facing pressures to enact a successful turnaround strategy, following a series of executive leadership changes and reported investments by activist Elliott Investment Management.

Analysts have pointed out that while Match has successfully increased its revenue per payer, the company may have underestimated the impact of its pricing strategy on user retention. The decline in paying users, especially after a price hike, indicates potential difficulties in further monetizing the existing user base. Match remains optimistic, however, stating that the pricing changes will lead to a more sustainable and healthier payer base. They also anticipate product initiatives to boost user growth in the latter half of the year.

Match’s stock price, which closed at $37.73, has seen a 28% decrease over the past year. Despite these challenges, Match is committed to returning a substantial portion of its free cash flow to shareholders in 2024, with a projection of nearly $1.1 billion in free cash flow generation. This commitment, along with the large-scale share buyback plan, reflects the company’s efforts to stabilize and grow amidst the recent downturn in its user base.

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