Sherwood News

Activist investors want dating app company Match Group to shape up

7/17/24 9:43AM

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].

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American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

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The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

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Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

Three US airlines have already hiked baggage fees. More are likely on the way.