​Match: A Tinder Trade

MoneyShow  |

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Second quarter results for Match Group (MTCH) came in pretty much as expected and management maintained guidance for 2017 based on enthusiasm for a new Tinder feature—Tinder Gold, explains small cap expert Doug Gerlach, editor of Investor Advisory Service.

Sales grew 12%, driven by 15% growth in the paid user base. Tinder continues to be the star, growing its paid user base by 86%.

Efforts to reinvigorate the match.com website are progressing as the company has enjoyed growth in four of the past five months.

Operating income grew 7%, held back by investments in selling efforts and an increase in employee compensation to convert Tinder options to those of Match.

Earnings per share from continuing operations grew 21% to $0.17, due to a significantly lower tax rate offset by a higher share count.

Match guided for third quarter sales growth of 12%-16% and is confident of hitting its full year operating income growth target of 12%-18% due to the introduction of Tinder Gold, a new premium pricing plan that will be rolled out fully in the fourth quarter.

The company is getting a new CEO effective January 1, 2018. Mandy Ginsberg, long-time leader of match.com, will take over for Greg Blatt, who will run Tinder until a new leader is identified.

Blatt had approached Match a year earlier about stepping down but wanted to remain to grow Tinder. Management changes are always tricky, but Ginsberg certainly has the right experience. MTCH is a Buy up to 19.5.

Doug Gerlach is president ICLUBcentral, a wholly-owned subsidiary of Better Investing.

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