Match Group (MTCH): Top Analyst Sizes Up Long-Term Risks from Facebook Dating

As far as Aegis' Victor Anthony is concerned, his bet is on Match against Facebook Dating; here's why.


Match Group Inc (NASDAQ:MTCH) shares have crashed almost 25% in the course of two days. That is the kind of power Facebook has when the social media titan steps into the ring and unleashes a new ‘Dating’ feature that have the parent company of Tinder quite skittish. Yet, should Match investors be scared?

Top analyst Victor Anthony at Aegis says no. After looking at Facebook up and down as a company with a bad track record of service launches that never seem to disrupt “incumbent businesses” the way investors originally anticipate, Anthony approaches the news unfazed. It was not so long ago that Facebook kicked off a feature for friends to send money through Messenger- a service that has yet to disrupt PayPal when assessing the payment company’s results.

Therefore, unconcerned that Facebook will knock Match out of the dating space in the long-term, even amid some near-term risk, the analyst reiterates a Buy rating on MTCH stock with a $45 price target. These target expectations imply a close to 25% upside from current levels.

Facebook’s dating profiles will only have visibility to other Dating users, using an algorithm that offers prospective matches considering preferences. Yet, the analyst cannot help noting a trail of tech titans before that attempted the same disruption: from Apple Music that never put a “dent” in Spotify’s growth to Shutterfly that continues to stand tall on two back-to-back quarters of robust growth; even after Apple, Amazon, and Google attempted to steal leadership. To put it bluntly, “It is not just Facebook […] It’s rare that they disrupt a market leader in one of the Internet verticals that is not core to their platform,” explains Anthony.

Meanwhile, the analyst did not even have to conduct a survey to see how negatively Facebook users are reacting to the news: “we went right to the comments section in Facebook to see what users think. The overwhelming majority of users see Facebook launching a dating service as a bad idea.”

In a nutshell, “Headline risks mostly in the near-term; If history is prelude the service holds minimal long-term risk to match. We are not being dismissive of the risk that Facebook could potentially disrupt the dating space. We simply point out that one, Facebook has largely failed at disrupting other core Internet verticals, and two, Facebook users are not thrilled by the service. For now, we see the service as headline risks for the stock and nothing more. We are betting that Match Group will face minimal longer-risks from Facebook Dating and have not altered our numbers or a valuation multiples,” Anthony concludes.

Victor Anthony has a very good TipRanks score with a 67% success rate and a high ranking of #88 out of 4,773 analysts. Anthony yields 16.0% in his annual returns. When recommending MTCH, Anthony garners 60.3% in average profits on the stock.

TipRanks suggests a mix of caution and optimism circling MTCH stock’s prospects. Out of 13 analysts polled in the last 3 months, 5 rate a Buy on Match while 8 maintain a Hold. Notably, the 12-month average price target stands at $4.00, marking nearly 22% in return potential for the stock.

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