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Tinder continued to be a powerful growth driver for parent company Match Group Inc., but shares fell on Wednesday after the online dating company presented gloomy prospects and announced it would pay a special dividend.
Meet
MTCH, -18.36%
has again beaten better than expected by strong growth in the number of subscribers at Tinder, although the company has forecast fourth quarter financial results below expectations. The stock was down 17% and on track to post its biggest percentage drop since May 1, when Facebook announced the creation of a dating product.
Match on Tuesday reported a GAAP profit of 44 cents per share on a quarterly business turnover of $ 444 million, while analysts surveyed by FactSet were expecting earnings per share of 33 cents and a figure of Business of 438 million USD. Adjusted earnings per share was 39 cents, exceeding analyst estimates of 35 cents.
For the fourth quarter, Match expects revenue of $ 440 million to $ 450 million, less than the $ 454 million projected by analysts. The online dating giant said it expected an annual business figure of $ 1.72 billion, which was the height of its previously announced range.
"The match continues to work well against difficult [comparisons]", Wrote Guggenheim analyst Jake Fuller after the publication of the report, but before the Wednesday morning results call. "That being said, investors may be looking for more in the forecasts." It assigns a neutral position to the action.
The company also announced, as part of its earnings report, that it would pay a special dividend of $ 2 per share on December 19.
"This shows our shareholders a real confidence in our ability to create value for shareholders while developing and investing in our business," said Executive Director Mandy Ginsberg at MarketWatch. She stated that the decision to pay a special dividend did not prevent the company from merging or making large investments.
Match's decision to seek a special dividend, however, sparked questions on Wall Street.
"The special dividend is a scratch to the head (80% back to IAC
IAC -8.62%
), and presumably IAC intends to do something with that money, "wrote Jefferies analyst Brent Thill before the call for results.
Do not miss: Tinder and Bumble will never be a match, and Match could be better off
Thill remains optimistic about Match's actions and is pleased with Tinder's accelerating growth. It awards the action a purchase with a target price of $ 70.
The company experienced an increase in Tinder subscriber growth in the September quarter, with an average of 344,000 sequential subscribers, bringing the total number of subscribers to 4.1 million. Tinder added approximately 300,000 subscribers in the June quarter, and while FactSet does not break down estimates of Tinder's growth in subscribers, a MarketWatch report on analyst reports revealed that most of Between them also expected about 300,000.
Ginsberg said the company was seeing sustained traction on Tinder Gold, a subscription offering that offers users a feature set on the popular dating app. Match has recently added "selections" to the Gold Basket, giving users the ability to view an organized list of a few games each day.
"We thought it was important to make Gold more convincing," Ginsberg said. The new feature has helped attract more users to this level of subscription.
See also: Match wants to switch from "slide right" to "press play
Match is off to a good start with Tinder U, a product for students that allows university students to see only other students when looking for contenders. Tinder U is free, but Ginsberg said it was a worthwhile venture for the company because the 18-22 age group is the fastest growing segment.
"Street is really about monetization, which is important, but what's just as important, if not more, is to make sure we're spending enough resources and energy on a free and fun experience," he said. she said.
Read: Facebook begins to deploy a dating product in Colombia
The company also plans to devote more resources to the application of Hinge dating at the end of the year and until 2019. Hinge has spread by word of mouth and is popular in New York, according to Ginsberg, but she expects that one marketing efforts will help her grow more widely.
Ginsberg said Match did not intend to relinquish its lawsuit against the competing Bumble application. "We certainly plan to protect our intellectual property," she told MarketWatch.
Shares in games have gained 58% since the beginning of the year, while the S & P 500
SPX, + 1.47%
increased by 7.6%.
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