Match Group, the company behind popular dating apps like Tinder and Hinge, has caught the attention of activist investor Starboard Value. With a 6.64% ownership stake in the company, Starboard has outlined various opportunities to enhance Match’s operations, financial results, and capital allocation.
Starboard’s proposed steps include optimizing Tinder through product innovation, cost-cutting measures, and margin improvement. Additionally, the investor suggests implementing a robust capital return program or potentially taking the company private. Despite being a market leader with strong revenue growth and network effects, Match Group’s stock performance has been lackluster since its separation from IAC in 2020.
While some media reports have characterized Starboard’s involvement as a push to sell the company, it is actually focused on operational improvements. Starboard believes that under the leadership of CEO Bernard Kim, Match can reignite revenue growth through innovation and product enhancements. The firm also emphasizes the importance of margin improvement, pointing out that Match’s spending has not translated into commensurate growth.
In addition to operational changes, Starboard is advocating for share repurchases as a means to create shareholder value. By reducing the share count and implementing operational enhancements, Starboard believes Match could generate significant free cash flow per share by 2026. If management is unable to drive revenue growth or improve margins, Starboard suggests exploring a potential sale of the company to maximize value.
Starboard’s activism at Match is part of a broader trend in which multiple activist investors target the same company. While this may indicate undervaluation and potential for improvement, it also presents challenges as management must navigate competing interests. Despite facing pressure from other activists like Elliott Management and Anson Funds, Match has the opportunity to engage constructively with Starboard to unlock value for shareholders.
As Starboard’s campaign unfolds, it will be interesting to see how Match responds to the investor’s proposals and whether the company chooses to collaborate with the activist on operational and strategic initiatives. With Starboard’s track record of successful activism and operational focus, Match has the potential to emerge stronger and more competitive in the online dating market.
