By Michael Elkins
BTIG reiterated a Neutral rating on Match Group (NASDAQ:MTCH) after adjusting for recent price increases on the company’s Tinder app.
MTCH recently rolled out a Tinder price increase in the U.S. and expects that to be a headwind to net adds, and the increase could take a quarter or more to be fully realized. Assuming the price hike to be a drag into 2Q, BTIG cut 1H23 Tinder net add assumptions and now models Tinder revenue growth for the year at the low end of management’s 5-10% guidance range with less confidence in MTCH's ability to drive growth in both payers and monetization.
Analysts wrote in a note, “MTCH has consistently caveated Tinder net add expectations by saying that is managing towards a 5-10% revenue outlook for 2023 with the potential to trade-off payers for monetization or vice versa. MTCH looks to be leaning towards the former. In our experience, investors prefer volume-led growth on the idea that a platform shifts more towards pricing as payer penetration matures. In any case, it will be hard to refute bear concerns around saturation as long as the Tinder payer count is declining sequentially.”
MTCH had previously pointed to 1Q Tinder payers being down q/q by around half of the 4Q decline with 2Q likely back to positive territory, but now they expect 2Q to be down as well. MTCH indicated that the recent U.S. price increase (Plus price doubled, Gold-Platinum up ~20%) would be a drag on payer count into 2Q. Meanwhile, it will take time to fully realize the price increase as the new pricing isn't applied to existing subscribers until they renew their membership. Price increases will be rolled out internationally at some point too and that could lead to further pressure on net adds.
BTIG cut Tinder q/q net adds estimates (1Q -100K to -150K, 2Q +200K to -50K, 2023 +850K to +650K), likely placing the company at a y/y decline through 4Q (1Q -0.5%, 2Q -3%, 3Q -1%). BTIG’s full-year revenue estimate only comes down slightly ($3,400M to $3,396M) with a step-up in revenue/payer ($14.15 to $14.39).
Shares of MTCH are down 4.85% in afternoon trading on Thursday.