Shares of online dating app conglomerate Match Group (MTCH 10.44%) rallied to close up 10.4% on Wednesday.

Match reported earnings last night that beat expectations on the top line and met expectations on the bottom line. And while the company didn't grow last quarter, it appears investors are more encouraged by new CEO Spencer Rascoff's turnaround plan.

Match beats expectations as management looks to turn around Tinder

In the second quarter, Match's revenue was flat year over year, which beat expectations, while earnings per share of $0.49 met expectations. Yet, the company also guided for revenue between $910 million and $920 million in the third quarter, which would mark a reacceleration to 2% to 3% growth.

Match Group has been in a severe funk since the end of 2021, and the stock had fallen more than 80% from its late-2021 highs as growth reversed to declines, especially at the company's largest app, Tinder.

Tinder is still under pressure, down 7% in the quarter, but Rascoff is optimistic on his turnaround plan for the app. Rascoff has streamlined Tinder's staff, laying off 20% of middle managers, reducing team size, introducing more artificial intelligence (AI) and automation, and speeding up the introduction of new features. While Tinder's revenue continues to decline, Rascoff noted there have been underlying improvements.

For the first time in a long time, Tinder's pace of product innovation is strong. To track progress, I am focused on metrics connected with user outcomes -- things like match rate, contact exchange, and inferred IRL meetups. Many of these deeper signals are trending up, and we're actively exploring ways to give investors more visibility into these metrics.

Meanwhile, the company's second-biggest app, Hinge, continues to outperform, growing a strong 25% in the quarter.

Hand tapping smartphone with heart icon coming out.

Image source: Getty Images.

The turnaround remains to be seen, but Match Group is cheap

Match Group probably won't see a massive turnaround until Tinder stabilizes and the company fixes some of the pain points that have affected the Gen Z generation's use of the app. Tinder still accounts for over half of revenue, so it's vital that Rascoff at least stops the declines there.

That being said, Match Group only trades around 9 times this year's free cash flow guidance, so it's still a cheap stock even after today's surge. Whether the stock can become a compelling turnaround or value trap will depend on execution at Tinder under Rascoff's new initiatives.