2022 has been a rough year for many investors, especially those with growth stocks in their portfolios. Since the start of the year, the iShares Russell Growth ETF is down 26.1% compared to the S&P 500 index, which is down 16.8% itself over that same time period. Some individual stocks have fallen much further and are down 50%, 70%, or even more in 2022. 

While 2022 has been painful, the extreme pessimism of short-term traders can provide fantastic buying opportunities for investors focused on the long term. Here's why investors should consider beaten-down growth stock Match Group (MTCH -0.12%) for their portfolios as 2022 comes to an end.

Match Group is dealing with multiple headwinds

Match Group is the leading online dating company worldwide. It owns and operates numerous websites and mobile applications that cater to romantic (and non-romantic) relationships across age groups, countries, and cultures. These include mobile apps Tinder and Hinge, which are its most important services at the moment. 

In May of this year, Match Group CEO Shar Dubey left and was replaced by Bernard Kim, a longtime video game industry executive and recent president at Zynga. After taking on the CEO role, Kim saw some concerning developments at Match Group, specifically at Tinder. Kim fired the existing Tinder team, brought in a new team of executives, and is currently searching for a new president to lead the division. Tinder is over half of Match Group's revenue and the majority of its operating income, so investors were not happy to see that things are going poorly at the dating service right now.

On top of a new CEO and brewing trouble at Tinder, Match Group was heavily affected by the rising value of the U.S. dollar in 2022. Match Group -- especially Tinder -- receives a lot of its revenue outside the United States, and foreign currency exchange headwinds led to less international revenue over the past several quarters. This, along with the slowdown at Tinder, caused Match Group's revenue growth to slow down to just 1% in the third quarter. On a currency-neutral basis, growth was 10% year over year.

Match's long-term opportunity remains solid

Considering all the headwinds, it's not surprising to see Match Group shares down nearly 68% for the year. But Kim and the new executive team seem confident they can reverse the troubling trends they saw at Tinder by providing a better experience for women, targeting Gen Z, incorporating advertising in-app, and offering virtual goods.

Tinder is still growing, it is just seeing slowing revenue growth. In Q3, Tinder's revenue grew 6% year over year (16% on a constant-currency basis) and it still hasn't tapped into the large opportunity to monetize online dating worldwide. If Tinder can grow by 6% with bad product roll-outs and major currency headwinds, the company has real potential to return to higher growth overall if Kim and the new team at Tinder can get the app back to 15% to 20% annual revenue growth.

Revenue growth has the potential to be even higher for Hinge, Match Group's second-biggest app. It is just beginning to fully monetize its users and roll out internationally. In the latter half of 2022, Hinge launched or will launch localized products across the majority of European countries (it was previously only in English-speaking markets), with India set to launch after that. Revenue at Hinge grew 40% year over year last quarter, and that is with minimal impact from international launches. Over the next few years, as the app expands into new markets and hones its monetization tactics, the app should be able to grow at an impressive double-digit rate and become a much more significant portion of Match Group's overall business.

Combine the steady growth of Tinder and the explosive growth at Hinge and there is real potential for Match Group to grow its consolidated revenue at 15% to 20% for the foreseeable future, even with some of its legacy sites like Match.com in permanent decline. 

But what about Match's valuation?

Unlike a lot of other growth stocks, Match Group has been consistently profitable since going public. Historically, it had an operating margin of around 30%, which was mainly driven by Tinder's adjusted operating margin of around 50%, according to management commentary. Last quarter, operating income compressed slightly to 26%. Over the last 12 months, operating income has dipped to $640 million vs. a prior peak closer to $900 million, which is not surprising given the foreign exchange headwinds and slowdown at Tinder.

MTCH Operating Income (TTM) Chart

MTCH Operating Income (TTM) data by YCharts

With the stock down so much, Match Group now has a market cap of just $12 billion. This gives the stock a trailing price-to-operating-income ratio of 18.75, which is not expensive given Match Group's historical revenue growth. But I think this severely underestimates Match Group's future earnings potential. Over the last 12 months, the company generated $3.2 billion in revenue. Grow that by 10% next year and you have $3.5 billion in sales, or over $1 billion in operating income if the margin can return to 30%. This feels achievable if Tinder reaccelerates growth and Hinge continues its impressive trajectory.

Of course, nothing is guaranteed in investing, but Match Group stock looks cheap today on both a trailing and forward basis and could be a buy at current prices