Activist investors want dating app company Match Group to shape up

In the last 3 years, investors have had a tough time finding much love for Match Group’s stock. As the owner of Tinder, Hinge, and a swathe of other dating apps and platforms, Match is the largest online dating company in the world, valued at some $8.5 billion at the start of this week. Activist investors think it should be worth much more.

It’s not me, it’s you

In a letter sent to the CEO of Match on Monday, Managing Member of activist hedge fund Starboard Value Jeff Smith confirmed that his company had taken a 6.6% stake in Match Group and outlined the steps his firm believes it should take to realize its full (financial) potential. Shares in the company rose 7.5% after the news broke.

Match Group, it should be said, is already pretty profitable. It makes the majority of its money from direct payers — people who fork out a monthly subscription for access to premium features such as unlimited likes or the ability to message before matching — and only a sliver from advertising. After all of its operating costs are accounted for, the company made a 21.5% operating margin in the first quarter of this year. Starboard thinks that number could be much higher, calling out the company’s “General & Administrative” costs as an area where expenses could shrink.

What are we?

Activist investors aside, the wider industry is in a pretty weird place generally. Between falling share prices, users with mismatched intentions, and the unending struggle to get more customers to cough up for premium versions, something has gone terribly wrong with dating apps, per J. Edward Moreno.

Chart-broken: We have no views on the merits of Starboard’s plan for Match Group, but we have strong views that this chart in the open letter to the CEO is a chart crime [the yellow line for Bumble is pegged to the right-hand axis, making it look like it’s performed better than Match Group].