According to data from S&P Global Market Intelligence, Match Group's (NASDAQ: MTCH) shares tumbled 15% in January. After the stock received a boost, there was an initial price surge, and recent performance has been excellent. The downturn had more to do with the broader macroeconomic climate that has seen stocks with enormous valuations lowering prices.
Match Group is a digital dating and social meeting platform company that owns the Match.com dating network and several popular Tinder websites. According to Match, 60% of all online dating relationships begin on one of its sites.
Growth has been spectacular, with revenue increasing at a 22% compound annual growth rate from 2016 through 2021. The company has made many acquisitions over the past few years to solidify its dominance and expand its operations, moving from the dating-only sector into more social meeting apps.
Despite these purchases, which are propelling the top line forward, Match stock is still profitable and has strong margins. Revenue grew 25% year over year to almost $3 billion in 2021, and operating income rose 14% to $850 million. However, fourth-quarter revenue of $806 million fell short of Wall Street forecasts of $818 million, and a fourth-quarter loss per share of $0.60 missed earnings-per-share expectations of $0.59.
The broad portfolio was strong in 2021, but new purchases have been especially successful, and these are an important component of future development. These developing companies were led by Hinge, the "app designed to be deleted," which attracted a young audience searching for long-term partnerships.
However, acquisitions have an impact on profitability, and Match Group incurred a net loss in the fourth quarter as a result of its acquisition of Hyperconnect, an Asian social connection platform..
After recovering from the early 2020 market collapse, its stock rocketed, climbing about 90% for the year. However, it tumbled in 2021, losing around 13% of its value, as well as many other internet businesses that had soared the year before.
The pandemic is exacerbating the challenges that Match Group is facing, as many people are still practicing some sort of social distancing. Match stock is still priced quite high, trading at 11 times sales, and management projects sales to grow 15% to 20% year over year in 2022. Match has a bright future with a return to profitability, but investors may find the valuation expensive, with the current guidance at the current price.