What happened
Shares of online dating giant Match Group (MTCH 0.63%) rose 21.3% in June, according to data from S&P Global Market Intelligence.
The online dating conglomerate, home of dating apps Match.com, Tinder, and rising star Hinge, got a boost on the back of a large insider purchase and positive analyst sentiment. As the stock had underperformed this year coming into the month, the increased confidence in management's turnaround efforts helped the stock soar in June.
So what
June started off on an optimistic note, as CEO Bernard Kim purchased $1.08 million worth of Match stock on the open market on May 31. That nearly tripled Kim's shareholdings in the stock, signaling a large show of confidence in his turnaround plan.
While Match had missed analyst expectations in its first-quarter earnings report back in May, the company is also implementing a turnaround -- which includes both streamlining its corporate structure and lowering costs -- while investing in a new marketing campaign for Tinder, whose growth stalled earlier this year. Meanwhile, Hinge is growing quite well at a 27% rate last quarter, and management also plans to launch a new dating app this summer. In addition, the company launched a $1 billion share repurchase program.
At a May conference, management disclosed that Tinder trends had increased in April and remained strong in May, perhaps showing the new marketing campaign aimed at the Gen Z audience is taking hold.
In the middle of June, analysts piled on. Research group Hedgeye made Match a new "long" call with an estimated 40% upside. Analyst Andrew Freedman noted the firm sees the turnaround plan leading to a revenue acceleration in the back half of 2023, especially since Match will be lapping some so-so quarters and, thus, have easy comps from the prior year.
And that analyst optimism was echoed on the sell-side as Baird analyst Vikram Kesavabhotla maintained his outperform rating on shares. Kesavabhotla noted solid usage and sentiment for future usage of dating apps in its Gen Z survey while also taking comfort in Match's share buybacks and insider purchases from earlier in the month.
MTCH Percent Off All-Time High data by YCharts.
Now what
While Match may look expensive today at around 40 times earnings, remember it's also amid a turnaround, with increased investments amid a soft revenue year. With the company's encouraging commentary on the Tinder turnaround, share repurchase, and new growth areas, such as Hinge and new apps, investors see more earnings growth going forward. Wall Street analysts see nearly 60% earnings growth this year and another 22% EPS growth next year, putting Match's forward P/E at 21 and its 2024 P/E at just 17.4.
Despite the June surge, Match is still amazingly 77% off its all-time highs from 2021. That makes it an intriguing play for investors targeting growth at a reasonable price.
