With the share price now down 38% from its October ’21 highs of US$175, it begs the question how much more downside can be priced while so many of their key performance metrics keep growing at an impressive rate?
We believe MTCH is well-positioned as the global leader in online dating, which remains early in the shift online with an estimated
50%+ share of global online dating users, with its largest brands including Tinder, Match, Meetic, OurTime, PlentyofFish, Pairs, and Hinge. Tinder is the #1 downloaded and top-grossing dating app worldwide, and we believe is on a strong trajectory with significant room for further payer penetration.
What really took me by surprise in the above paragraph from Mr Carpenter is that only 25% of singles are using dating apps. Providing the Tinder Swindler hasn’t scared off all the single ladies, then there is clearly still a huge addressable market for Match Group to grow into.
Despite the organisation enduring some unfortunate one-off items in their Q4 ’21 earnings which I’ve already highlighted, I don’t like to ever judge a company on one soft quarter. Dig a little deeper and you can see the business is absolutely thriving on a revenue basis at the very least.
More importantly, a return to profitability is in the offing with forward guidance from Match Group suggesting it will return US$2.60 earnings per share for 2022, and a further US$3.31 for 2023.
The number of singles who wish to pay for special in-app features, like unlimited swipes for instance, is now at 16.2mln and from mai otaku those paying customers, revenues per person are up to US$.
The business is evidently growing at a very healthy rate in all the right areas you’d like to see, but shorter-term items are still keeping the share price in the doldrums, and maybe that’s where the opportunity lies.
You could literally stick your pin into any NASDAQ listed stock right now and discover a depressed valuation. Some more than others, some less so.
Even as recently as , you’d find Match Group trading at 17x its Price-to-Sales (P/S). In hindsight, you’d argue that figure is a touch frothy and as your politically incorrect uncle will tell you, times were different then. It’s not and the NASDAQ isn’t making new all-time highs every week with a QE rocket up its backsi… Anyway, I digress.
Times are indeed different and Match Group now finds itself valued on a lowly X10.2 Price-to-Sales. A touch unfair considering how well the underlying business is performing, and it might be fairer to apply a higher P/S valuation providing they can return to profitability and revenues increase in-line with their forward guidance.
Applying their 5-Year P/S average of vs 2022 expected revenue, I come out with a share price of US$152 but I must stress, I’m not giving Match Group an explicit price target as such, but simply employing a loose Price-to-Sales calculation against their historical average.
«Our E EBITDA of US$1.5B, which does not assume any potential positive impact from app store fee reductions. We note this is a premium to key comp BMBL that trades at 18x, which we believe is justified given MTCH’s industry-leading market share and best-in-class margin profile»
This is an incredibly trying period for investors and at a time when sentiment seems to be worsening every week and Putin having now breached Ukrainian borders, it takes a brave individual to carry on buying the dip. Some of us are luckily able to endure stock market corrections better than others.