Match Group shares can rally 30% thanks to a recovery in Tinder, says BTIG

Match Group shares are set to pop as Tinder recovers, according to BTIG. “Tinder hit a wall last year,” with growth slowing into 2023, analyst Jake Fuller said. But he noted that net add outlook is now improving, with accelerating growth and upward-moving estimates. Fuller upgraded Match Group to buy from neutral. “MTCH pointed to execution issues and lack of product innovation, which led to a revamping of the Tinder team. Efforts so far have largely been focused on monetization (scaled back intro pricing/discounts in 4Q and raised prices in the US in 1Q). That has been a drag on payer count, but we are finally seeing the RPP offset and the net add impact should be largely washed through the system,” Fuller wrote in a Wednesday note. “Focus is now shifting to product innovation, which will be the key to sustaining growth.” Fuller set a price target of $60 on the stock. The new price target implies 30% upside from where shares closed Tuesday. The company posted an earnings and revenue beat for the second quarter Tuesday. Management’s current-quarter guidance also came above analyst estimates. The analyst noted that Tinder is showing an improving trend in its daily new users numbers and reactivation trend. “We bring estimates up with a view that Tinder is through the worst, issues were execution-related not category saturation and that the new team looks to be on the right track,” said Fuller. He added that getting back to growth was Match’s first step in proving it can consistently deliver product innovations. If Tinder can consistently deliver payer penetration growth, the company could untap greater opportunity, according to the analyst. Match’s other platforms include Hinge, which has seen growth accelerate more than 35% in the prior quarter. “MTCH is a dominant category leader with a strong margin profile and modest valuation,” Fuller said. Shares jumped 10.5% Wednesday during premarket trading. The stock has gained 11.2% year to date. —CNBC’s Michael Bloom contributed to this report.