What happened

Shares of Match Group (NASDAQ:MTCH) declined 22.1% in November, according to data from S&P Global Market Intelligence, after the online dating specialist announced attractive quarterly results but followed with disappointing forward guidance.

To be sure, Match Group stock fell 17% on Nov. 7, 2018 alone as the company revealed that its third-quarter revenue climbed 29% year over year to $443.9 million -- above the $440 million high end of guidance provided in August -- translating to a 105% increase in adjusted earnings per share to $0.39. 

Four people standing in a circle using smartphones.

IMAGE SOURCE: GETTY IMAGES.

So what

"Match Group delivered another quarter of strong top and bottom line growth, with Tinder continuing as our growth engine," stated Match Group CEO Mandy Ginsberg. "We are making product and marketing investments in our brands to drive growth across our portfolio."

To be sure, Tinder largely drove a 23% year-over-year increase in Match Group's number of subscribers, to 8.1 million, as well as a 6% gain in average revenue per user to $0.57. 

But Match Group also announced a surprise special dividend of $2 per share. Ginsberg justified the payout by citing the company's "significant free cash flow" even as it pays down debt. But some investors view it as a questionable move given Match Group's conservative forward guidance (more on that below), and -- keeping in mind the dividend will cost roughly $560 million compared with Match Group's $403 million in cash on hand at the end of last quarter -- the fact that the company will need to go further into debt to fund it.

"We constantly analyze various ways to return capital to our shareholders," added Match Group CFO Gary Swidler during the subsequent conference call. "The dividend is something that we've been contemplating for some time, and we felt that now was the right time to provide capital return to shareholders via this method."

Now what

Finally, Match Group told investors to expect fourth-quarter revenue of $440 million to $450 million, marking significantly decelerated 17% year-over-year growth at the midpoint. What's more, Match Group warned that Q4 EBITDA growth rates and margin will be pressured by a number of factors, most notably including a big boost in marketing spend focused on promoting Tinder.

That might well be a good investment for the company, and this certainly wasn't a "bad" quarter for Match Group. But with shares up nearly 60% year to date leading into its report, it's hardly surprising that the market wasn't willing to forgive its tepid outlook and its questionable special dividend.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Match Group. The Motley Fool has a disclosure policy.