The market often sees it as a good sign when the CEO of a company personally buys more shares of the business. That's what recently happened with Match Group's (MTCH 2.43%) CEO, Bernard Kim, who acquired an additional 31,439 shares of the online dating specialist in late May. The company's stock rose slightly on the news, but Match Group remains down by 53% over the trailing-12-month period.
Even so, several excellent reasons exist to follow Kim's lead and initiate a position in Match Group. Let's consider three of them.
1. Optimizing key growth drivers
Match Group's dating websites and apps portfolio features over half a dozen platforms. But two of its most important are Tinder and Hinge. Indeed, the former accounted for $441 million -- or more than half -- of Match Group's total first-quarter revenue of $787 million, which declined by 1% year over year; Tinder's revenue remained flat compared to the year-ago period.
However, the company's most prized asset has been experiencing sluggish growth recently, which the management team promised to address. How are things going? One of Match Group's priorities was to change people's perception of Tinder, which may have become known as an app for people interested in short-term flings.
The company started a marketing campaign in the first quarter in the U.S., the U.K., and other key markets mainly directed at women between 18 and 24. According to management, the campaign is helping improve the perception of Tinder, and the app has had a noticeable improvement in downloads in these markets.
NASDAQ: MTCH
Key Data Points
Match Group is also seeking to give Tinder's users more flexibility, including on pricing. The company is testing weekly subscription options, as opposed to its regular pay-per-month package, to cater to users who may not want flexibility when it comes to canceling their subscriptions and deleting the app.
Match Group has also introduced a feature that allows Tinder users to filter potential mates by their desired relationships. These initiatives won't immediately affect Match Group's financial results, but they should over the long run. Meanwhile, Hinge is performing exceptionally well. In the first quarter, the app's direct revenue rose by 27% year over year.
Hinge's selling point is that it's a dating app designed to be deleted. In other words, it caters specifically to people looking for serious, long-lasting relationships. Match Group recently launched HingeX, a new tier that helps boost subscribers' visibility on the app. With Hinge performing well and Match Group's efforts to jump-start Tinder's growth, the company's fortunes could soon turn around.
2. A massive worldwide opportunity
Online dating has become a lot more popular in the past 20 years. However, Match Group has often emphasized that there are still plenty of people worldwide to bring into the ecosystem. That is particularly true in Asia. Despite being the most populated region in the world, it is still, in the company's words, in the "early stage of user adoption."
Match Group is naturally looking to pounce on this opportunity. For this purpose, the company acquired Hyperconnect, a South Korea-based company that owns a duo of social discovery apps, back in 2021. Match Group will seek to build its brand and expand its footprints in Asia and elsewhere, which could translate to millions of potential new users in the coming years, if all goes according to plan.
3. The price is right
Match Group's recent poor stock market performances have at least one silver lining: The company's valuation has become much more reasonable. The online dating expert's forward price-to-earnings and forward price-to-sales are trending on the low end of their one-year averages.
MTCH PE Ratio (Forward) data by YCharts
That's great news for investors who want to initiate a position today, especially as the company's business looks to be in a strong position to recover from its recent woes. And with Match Group's solid long-term prospects, the company's current levels could deliver excellent returns to patient investors from here on out.
