Starboard Builds Big Stake in Tinder Parent Match
Activist hedge fund calls for online-dating company to fix margins or pursue sale
Match Group MTCH -0.81%decrease; red down pointing triangle has drawn the attention of another activist investor, Starboard Value. The hedge fund has built a big stake in the online-dating company and is pushing for a possible sale if a turnaround isn’t successful, according to people familiar with the matter.
Match has recently faced at least two other activists, including Elliott Investment Management.
The details
Starboard has a position in Match of more than 6.5%, the people said, and has discussed with Match opportunities to improve growth, profitability and spending.
Match shares have fallen about 12% so far this year, bringing the company’s market capitalization to $8.5 billion.
Starboard believes Match should improve Tinder, which represents more than half of the company’s total revenue and has been a key focus of Match Chief Executive Bernard Kim, through product innovation and cost cuts. Starboard also sees opportunities for the Hinge business and the company’s other emerging apps.
The firm also believes Match should be more aggressive with share buybacks.
If Match isn’t able to make these fixes as a public company, Starboard believes the company should consider going private.
A Match spokesperson said the company is “relentlessly focused on executing our key initiatives, which include: driving growth at Tinder, continuing Hinge’s impressive expansion, maintaining appropriate financial discipline, and returning capital to our shareholders.”
The context
In 2021, amid the Covid-19 pandemic and a boom in internet stocks, Match’s market capitalization soared well above $40 billion. More recently, a falloff in active users and bloated costs have weighed on shares.
Besides Tinder and Hinge, Dallas-based Match’s portfolio of dating platforms includes OkCupid and Plenty of Fish, in addition to its namesake Match brand. The business dwarfs its publicly traded rivals including Bumble, valued at $1.2 billion, and Grindr, at about $2.2 billion.
Match in May reported that its first-quarter revenue grew 9% year over year, while the number of paying users dropped 6%. Match said Tinder faced headwinds in part due to weaker consumer discretionary spending.
Elliott built a big stake in Match earlier this year, and the company added two new board members and entered an information-sharing pact with the activist. The smaller Anson Funds Management also amassed a stake in Match.
(It isn’t the first time Elliott and Starboard have shown up in the same investments together, either. This happened at eBay in 2019 and at Salesforce last year.)
Starboard, run by Jeff Smith, invests across sectors but is especially active in technology, including recent efforts at GoDaddy and Splunk, before it was sold to Cisco.