Starboard Value Sends Letter to Match Group Regarding Opportunities to Substantially Increase Shareholder Value

Rhea-AI Summary

Starboard Value LP, holding approximately 6.6% of Match Group's (NASDAQ: MTCH) outstanding common shares, has sent a letter to the company's leadership outlining opportunities to enhance shareholder value. The letter addresses initiatives for improving growth, profitability, and capital allocation following long-term share price underperformance.

Starboard believes Match is a high-quality market leader in the expanding online dating market with potential to generate over $5.50 of free cash flow per share by 2026. However, the letter also urges the board to remain open to strategic alternatives, including a potential sale, if turnaround efforts prove challenging.

Positive

• Starboard Value LP holds a significant 6.6% stake in Match Group
• Match Group is recognized as a high-quality market leader in online dating
• Potential to generate over $5.50 of free cash flow per share by 2026
• Opportunities identified for improving growth, profitability, and capital allocation

Negative

• Long-term share price underperformance
• Suggestion to explore a sale if turnaround efforts fail, indicating potential execution risks

Financial Analyst

Starboard Value LP's letter to Match Group highlights several key aspects significant to investors. Starboard's stake (6.6% of shares) in Match Group indicates a substantial investment and vested interest in the company's performance. This letter underscores their dissatisfaction with the current share performance and proposes actionable measures to enhance shareholder value. Notably, Starboard suggests that if Match Group cannot achieve the proposed improvements, the company should consider strategic alternatives, such as a sale.

From a financial perspective, Starboard's expectation of generating $5.50+ of free cash flow per share by 2026 is ambitious. Free Cash Flow (FCF) is important as it represents the cash a company can generate after accounting for capital expenditures, which can be used for dividends, buybacks, or reinvestment. If these projections are met, it could significantly bolster investor confidence and the company's market valuation. However, this is contingent upon effective execution by the current management or any new leadership brought in as part of strategic alternatives.

Investors should also consider the broader market context. The online dating market is expanding and Match Group is well-positioned within it. However, competition is intensifying, with new entrants and existing players vying for market share. Thus, the proposed improvements in growth, profitability and capital allocation will be critical in maintaining and enhancing Match Group’s competitive edge.

In the short term, investors may experience volatility as the market digests this news and evaluates the likelihood of the proposed changes being implemented successfully. Long-term prospects seem promising if the company can achieve the outlined financial targets and navigate the competitive landscape effectively.

Overall, while the letter from Starboard Value LP highlights potential upsides, it also suggests significant challenges that need to be addressed. Investors should monitor subsequent actions by Match Group's management and any strategic moves that may arise.

Market Research Analyst

The online dating market has been experiencing substantial growth, driven by increasing internet penetration, changing societal norms and a growing preference for online interactions. Match Group, as a leader in this space, has a strong portfolio of brands such as Tinder, Match.com and OkCupid. Starboard Value LP's letter identifies this growth trajectory but also points out that Match Group has not capitalized fully on its market position, as evidenced by its recent stock underperformance.

The proposed initiatives aim to enhance growth and profitability, which could involve optimizing existing platforms, exploring new revenue streams, or improving user acquisition and retention strategies. However, execution is key. Market dynamics are rapidly shifting and user preferences are evolving, requiring constant innovation and strategic agility.

Moreover, the mention of potentially exploring a sale adds an interesting dimension. This could be a response to competitive pressures or an acknowledgment of potential synergies with other tech or media companies. Investors should consider how such a move could reshape the market landscape, possibly leading to consolidation that could benefit larger players but pose challenges for smaller competitors.

For retail investors, the takeaways are to scrutinize how Match Group’s management responds to these recommendations and the potential impact of any strategic alternatives. The execution of these initiatives could influence not only the company's market position but also investor returns in a significant way.

Believes Match is a Growing, High-Quality Market Leader with an Enviable Position in the Expanding Online Dating Market

Lays Out Initiatives for Improving Growth, Profitability, and Capital Allocation Following Long-Term Share Price Underperformance

Outlines Opportunity for Match to Generate $5.50+ of Free Cash Flow Per Share in 2026 and Create Significant Shareholder Value, But Urges the Board to Remain Open to Strategic Alternatives if a Turnaround Proves Challenging

NEW YORK--(BUSINESS WIRE)-- Starboard Value LP (together with its affiliates, “Starboard”), which holds approximately 6.6% of the outstanding common shares of Match Group, Inc. (NASDAQ: MTCH) (“Match” or the “Company”), today announced it sent a letter to the Company’s Chief Executive Officer, President & Chief Financial Officer, and Board of Directors regarding actionable opportunities for enhancing shareholder value. In addition, the letter lays out Starboard’s view that Match should explore a sale in the event the Company’s leadership is unable to execute on the prescribed value-enhancing initiatives.

The letter can be accessed at https://www.starboardvalue.com/presentations.

About Starboard Value LP

Starboard Value LP is an investment adviser with a focused and differentiated fundamental approach to investing in publicly traded companies. Starboard invests in deeply undervalued companies and actively engages with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240716279903/en/

Investor Contacts:

Peter Feld, (212) 201-4878

Gavin Molinelli, (212) 201-4828

www.starboardvalue.com



Media Contacts:

Longacre Square Partners

Greg Marose / Charlotte Kiaie, (646) 386-0091

starboard@longacresquare.com

Source: Starboard Value LP

FAQ

What percentage of Match Group (MTCH) shares does Starboard Value LP own?

Starboard Value LP holds approximately 6.6% of Match Group's (MTCH) outstanding common shares.

What opportunities has Starboard Value identified for Match Group (MTCH)?

Starboard Value has identified opportunities for improving growth, profitability, and capital allocation at Match Group (MTCH), with potential to generate over $5.50 of free cash flow per share by 2026.

What alternative does Starboard suggest if Match Group (MTCH) struggles with its turnaround?

Starboard suggests that Match Group (MTCH) should explore strategic alternatives, including a potential sale, if the company's leadership is unable to execute on the prescribed value-enhancing initiatives.

What is Starboard's view on Match Group's (MTCH) position in the online dating market?

Starboard believes Match Group (MTCH) is a growing, high-quality market leader with an enviable position in the expanding online dating market.