Match Group Stock Price Drops after Tinder Sees Decline in Paying Subscribers

The stock price for dating app conglomerate Match Group dropped after the company revealed that its Tinder app saw a significant drop in paying users. Shares went down more than 15 percent to $29, the lowest price it has traded for since the company spun off from IAC in July of 2020.

According to Newsweek, Match Group sent a letter to shareholders in early November with the news that Tinder had lost 826,000 paying customers. CEO Bernard Kim said in the letter: "While our collective efforts have put the company on much improved footing, there is still much work to be done.”

Match Group’s reported third quarter earnings were a highlight - they beat analyst estimates ($881.6 million compared to the expected $880.6 million), according to LSEG, formerly Refinitiv.

But fourth quarter projections concerned analysts, as well as the big drop in paying users for Tinder. According to Newsweek, Match Group said that fourth quarter revenue would be between $855 million and $865 million, considerably lower than analysts’ estimates of more than $890 million.

“The 4Q outlook was the biggest surprise, and in our view why MTCH shares are trading down, with the revenue guide of $855-865M well below the Street at $894M,” JPMorgan analysts wrote, according to CNBC.

The analyst group went on to say: “Beyond the guide, we suspect a key area of scrutiny will be around trends in Tinder payers. This metric was down 6% y/ y in 3Q (in line with guidance) – but MTCH called out a ~200K sequential headwind in 4Q as weekly subscribers churn out of the system.”

Match Group had other big news – the company announced in the shareholder letter that it had settled its lawsuit with Google. The $40 million that had remained “in escrow” while the lawsuit moved forward would now be returned to Match Group. The settlement also stated Match Group did agree to employ Google’s User Choice Billing by the end of March 2024, which means they will still be paying some cut of subscription fees to Google, no matter which payment platform a subscriber uses.

Analysts pointed to Match Group’s challenges, specifically continuing inflation and economic uncertainties globally, which means people aren’t spending money on non-essential items like dating app subscriptions. However, long-term outlook remains optimistic, especially with Tinder and Hinge both offering premium monthly subscriptions ($500 per month and $60 per month respectively) for “highly motivated daters.” Hinge also continues to see significant growth in subscriptions and userbase.