Match Group (MTCH 2.05%) posted its first-quarter earnings report on May 3. The online dating giant's revenue rose 20% year over year to $799 million, beating analysts' estimates by $4 million. Its net income increased 4% to $180.5 million, or $0.60 per share, which also surpassed analysts' expectations by three cents.

However, Match expects its revenue to rise just 13%-14% year over year in the second quarter, compared to the consensus forecast for 18% growth. It also announced that CEO Shar Dubey, who took the helm just over two years ago, would step down on May 31 and be succeeded by Bernard Kim, the president of the video game company Zynga.

A smiling person uses a smartphone outside.

Image source: Getty Images.

Match's soft guidance and jarring CEO change spooked the bulls and overshadowed its first-quarter earnings beat. But could Match be a potential turnaround play after losing more than 40% of its value this year?

Is Match still growing?

Match owns more than a dozen online dating apps, including Tinder, Hinge, OKCupid, and Plenty of Fish. Its core growth engine is Tinder, and it generates nearly all of its revenue from paid subscriptions.

Match ended its first quarter with 16.3 million payers, which represented 13% growth from a year ago but just 1% growth from the fourth quarter. Tinder accounted for 10.7 million of those payers. That also represented 1% growth from the fourth quarter, but its year-over-year growth rates are murky because it didn't disclose Tinder's exact payer numbers last year.

Match's total revenue per payer (RPP) grew 6% year over year (but fell 1% sequentially) to $16. Tinder's RPP rose just 1% year over year.

Bracing for macroeconomic challenges

Match is still gaining new users, but its sequential growth seems to be peaking. This year it expects macro headwinds -- including Russia's invasion of Ukraine, new waves of COVID-19 infections, and the strengthening of the U.S. dollar -- to all impact its near-term growth.

Match expects the Russo-Ukrainian war to reduce its revenue (mainly at Tinder) by about $10 million per quarter until the conflict ends.

As for COVID, Match says a post-lockdown recovery is "gaining momentum," but it's still moving "more slowly than any of us would like." However, it still experienced a "gradual recovery" in Japan, its second-largest market after the U.S., after the country lifted its COVID restrictions in mid-March.

Match also expects rising interest rates to strengthen the U.S. dollar against other foreign currencies. Those headwinds, which already reduced its year-over-year revenue growth by two percentage points in the fourth quarter and four percentage points in the first quarter, will likely intensify over the next few quarters as more rate hikes occur.

Headwinds for its operating margins

Match ended the first quarter with an operating margin of 26%, compared to 29% in the previous quarter and 28% a year ago. Its adjusted operating margin also declined two percentage points sequentially and stayed flat year over year at 34%.

That compression was mainly caused by Match's acquisition of the South Korean social discovery platform Hyperconnect -- which operates at lower margins than its main dating apps -- last June.

But in the second quarter, Match expects a mandatory billings change at Alphabet's Google Play (which goes into effect in June) to generate additional headwinds for its operating margins.

In spite of those challenges, Match still expects its adjusted gross margin to improve sequentially to about 36% (at the midpoint) in the second quarter, but it warns that forecast might shift as Google rolls out its billings changes.

A murky outlook and an abrupt CEO change

For the full year, Match expects its revenue to be "closer to the bottom end" of its previous forecast for 15%-20% growth. Analysts expect its revenue and earnings to rise 16% and 13%, respectively, this year.

Those growth rates are still stable, and its stock looks reasonably valued at 24 times forward earnings and six times this year's sales. However, Match is still highly sensitive to macro headwinds, and investors can currently buy more resilient tech stocks -- like Alphabet and Microsoft -- at similar valuations.

That's why Match's abrupt decision to hire Zynga's president as its new CEO rattled investors. There are certainly a few similarities between mobile gaming and online dating, but Match arguably needs someone with a lot more experience with the latter market to navigate the challenging year ahead.

Match isn't a compelling buy right now

Match's first-quarter numbers were passable, but it clearly expects to hit a few speed bumps this year as the Ukrainian war, COVID-19 outbreaks, currency headwinds, and Google's billings changes all throttle its growth.

Those shortcomings make Match a mediocre investment right now, and it's not the kind of stock you want to own in this challenging market. I believe investors should either stick with the highest-quality names or deep value plays this year -- and Match doesn't comfortably fall into either category yet.