Match Group: Looking for Love?

09/14/2018 5:00 am EST


Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

When people go online looking for love and marriage (or something a little more temporary), they frequently point their browsers to one of the dating sites operated by Match Group (MTCH), explains Mike Cintolo, editor of Cabot Top Ten Trader.

Match Group gives itself credit for founding the whole idea of online dating, starting in the mid 1990s with the sites Match and Meetic.

The company now has a portfolio of dating offerings that’s led by Tinder and includes Match, PlentyOfFish, OkCupid, OurTime, Meetic and Pairs, each with a slightly different approach and target audience.

The company boasts more than seven million average subscribers and claims that 60% of all dates, relationships and marriages that started on all online dating programs are traceable to a Match Group site.

Tinder is the hottest product; it’s the number one downloaded dating app worldwide, the top grosser among dating sites and is the second highest grossing app overall worldwide. The company’s combined subscriber annual growth rate has been 17% in North America and 41% internationally.

Management has done a great job of monetizing the popularity of its products, with triple digit earnings growth (117% and 156% in Q1 and Q2, respectively) and analysts forecasting 117% earnings growth for this year and 22% in 2019 (likely conservative given that the company regularly trounces estimates).

The company slipped badly in 2017 in earnings terms and was punished by investors, but the earnings report on August 7 seems to have rekindled the romance.

MTCH came public in November 2015 in the mid-teens, and moved glacially until September 2017, when it caught fire, soaring to $49 in April 2018. The chart shows a huge dip on May 1 (a result of a poor quarterly report) and a corresponding gap up on huge volume on August 8 after a well-received one.

The stock looks ready to head higher, possibly after a bit more rest. There’s plenty of volatility, so buying on a dip of a point or so looks advantageous. Use a stop around $46.

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