Match Group (MTCH -0.72%) -- the leading online dating company around the world and home to apps such as Tinder and Hinge -- is one of the worst-performing stocks over the past year. Shares are down over 65% in the last 12 months, severely underperforming the S&P 500 over that time span. Investors are worried about managerial changes, foreign-exchange headwinds, and a general slowdown for a business that used to consistently grow its revenue by 20% or more each year. 

Times are tough for Match Group shareholders right now, but there are reasons to be optimistic about this stock going forward. Here are three reasons Match Group is set for a rebound in 2023.

1. A refreshed Tinder application 

Earlier this year, Match Group brought in a new CEO, Bernard Kim. After touring all of Match Group's online dating companies, his biggest takeaway was that Tinder was underperforming its potential. He subsequently fired the division's management team and installed himself as the interim leader of Tinder while he looks for a new CEO. He also brought in an all-star cast of executives from inside and outside Match Group to improve the application.

Kim will be looking to refocus Tinder's execution on improving the customer experience, leaving behind the metaverse-type investments that were discussed in 2021 and early 2022. Specifically, he wants to build a better subscription package for women, win over Gen Z customers through better branding, introduce virtual coins to improve monetization, and expand advertising efforts. These will take years to fully flesh out, but I am optimistic an improved Tinder can drive growth for Match Group for many years.

Tinder is Match Group's most important asset with 11.1 million of its 16.5 million total paying customers around the world using the application. This change in strategy has meant a sacrifice in short-term revenue growth with overall Match Group revenue only growing 1% year over year in the third quarter and 10% on a constant-currency basis. Kim says a revamped Tinder product will lead to a return to higher revenue growth for the division in 2023, which will be the most important driver in Match Group's overall top-line growth as well.

2. International growth at Hinge

While Tinder has hit a speed bump in 2022, Match Group's second most important application, relationship-focused app Hinge, continues to put up fantastic growth numbers. Management expects the segment to add $100 million in incremental revenue in 2023, on top of the $285 million it's set to generate this year.

Why has growth looked so promising at Hinge? Two reasons. First, it is crushing user acquisition with monthly active users (MAUs) aged 18 to 25 up 120% and MAUs over the age of 26 up almost 80% since Jan. 2020. With a consistent percentage of users that eventually turn into paying subscribers, MAU growth is an indicator of future revenue growth for Hinge.

Second, the segment is in the early days of its international expansion, which Kim has accelerated to two new markets each quarter (the previous cadence was one per quarter). In Germany, after Hinge started implementing its marketing strategy, the application jumped from No. 20 to No. 4 in the top downloads for dating apps in the country. The team is set to officially launch Hinge across Europe and India through the end of 2023, as opposed to only being in English-speaking markets before 2022. This rapid expansion is setting up Hinge to consistently grow its revenue and eventually rival Tinder years down the line.

3. Cheap valuation and stock repurchases

Match Group's stock is down big this year, which has brought down its valuation as well. The stock currently has a market cap of $13.8 billion. Earlier this year, the business was on pace to hit $1 billion in annual free cash flow, but that metric has taken a hit due to a one-time litigation payment, foreign-exchange headwinds, and the shakeup at Tinder that's sacrificing short-term revenue growth. 

MTCH Free Cash Flow Chart

Data by YCharts.

A collapse in free cash flow is typically a cause for concern, but for Match Group, I think it's easily solved in 2023 with the new Tinder strategy and the continued growth at Hinge. Plus, it's unlikely the company will see foreign-exchange headwinds next year as bad as they were in 2022, which was one of the U.S. dollar's strongest years of the last few decades.

Taking all this into consideration, Match Group could clear that $1 billion free-cash-flow milestone in 2023 before marching even higher. That would give the stock a price-to-free-cash-flow (P/FCF) ratio of less than 15, which would be especially appealing if the company can improve its growth prospects too.

Match Group has already begun to return cash to shareholders through share buybacks, and its outstanding share count is down 1.4% in the last six months. These buybacks will boost shareholder returns over the long haul and are another reason to be optimistic about Match Group's fortunes in 2023.