Thursday Aug.04, 2022

💔 Match’s dating doldrums

Tinder’s trampled spark (Peerapon Boonyakiat/Getty Images)

Hey Snackers,

Plz fix: Equifax issued incorrect credit scores for millions of consumers, causing some loans to be wrongfully denied. The credit giant blamed a “coding issue.”

Stocks rallied yesterday, led by the techy Nasdaq. OPEC+ said it'll raise oil production just a smidge in what analysts described as a dis to President Biden. But #PumpAnxiety is easing: the price of gas fell for the 50th straight day.

Ghosted

Unmatched: Tinder's parent company lost a fifth of its value as its pandemic swiping boom fizzles

Girls’ night out > another coffee date… Match Group wasn’t feeling the love from investors after earnings yesterday. Shares of the dating icon plunged 18% after it reported that swipe-fueled growth was cooling. Refresher: Match owns Tinder, Hinge, OkCupid, and 20+ other e-romance businesses.

Burned out: Match’s revenue growth slowed significantly last quarter to 12%, and it’s lowered its forecast for the current quarter too.
Left-swiped: Tinder’s CEO stepped down this week after less than a year on the job. America’s #1 dating app also ditched its romantic metaverse plans (including a Tinder digi-coin).

From FaceTime to face-to-face… Match benefited during the pandemic as stuck-at-home singles shelled out more $$ for extra swipes to connect. But now users are more interested in BFF vacay retreats than at-home swipe sprees. Last quarter, Match's revenue per user grew just 3% — down from 15% last year. Global dating-app revenue has grown every year since 2015, but downloads have dipped from prepandemic highs.

Beesting: Rival Bumble has nearly doubled its market share since 2017 and its stock is down less than 0.5% this year — whereas Match is down over 50%. Bumble (which reports next week) has said it has “substantial” growth opportunity in the US.

There are plenty of fish left in the sea… The key is fishing in the right spot. As Match’s saturated North American market hits a wall, it’s looking overseas to expand. Last year, Match spent $1.7B to buy Korean social company Hyperconnect (its biggest acquisition) and launched Hinge in Germany. This year Hinge is expected to bring in $300M in revenue as it launches in other European countries and India, where dating apps are less popular.

Staked

PayPal and Pinterest shares soar after activist investor Elliott snaps up their slumping stocks

A modern Midas… In Greek mythology, everything King Midas touched turned to gold. Activist hedge fund Elliott Management seems to think it has the Midas touch too. Shares of PayPal and Pinterest have spiked 14%+ this week after Elliott disclosed big stakes in each company (it’s now their top shareholder).

Staying active: Elliott is one of the world’s oldest hedge funds, founded in 1977 by Paul Singer. Since then, it’s bought 40 companies (like: Barnes & Noble, LogMeIn), built stakes in Twitter, AT&T, and Samsung, and is managing $56B in assets.
High stakes: Elliott uses its stake in companies to force them to change (think: cost cutting, replacing execs). Right now it’s also invested in Marathon Petroleum, Tesla, Wayfair, and Suncor Energy.

Activism’s so hot right now… Shareholder activism boomed last year, thanks partly to growing awareness of environmental, social, and governance issues. Investment companies like Engine No. 1 and Icahn Enterprises have lobbied (successfully) to install climate-focused board members at Exxon and (unsuccessfully) to force McDonald’s to change how it treats its pigs.

But at the end of the trading day, a primary goal of shareholder activists is plain ol’ profits. Example: Elliott bought Athenahealth for $5.7B in 2018 and sold it for $17B earlier this year, pocketing $5B+.

Activists love bargains… and in today’s market many companies are priced lower. The S&P 500 is down 13% this year, but some shares are down way more: before the Elliott news, Pinterest and PayPal had lost about 40% and 50% this year. For activists like Elliott, slumped shares are an opportunity to launch turnaround efforts at a lower price. Shareholder activism is expected to rise this year as investors keep bargain hunting.

What else we’re Snackin’

Frappy: Starbucks enjoyed record quarterly sales, driven by demand for icy drinks like cold brew, shaken espresso, and fruity refreshers. Starbs says Gen Z is thirsty for Insta-worthy customized bevs.
Vax: Moderna’s stock popped 16% on expectation-beating sales growth, but quarterly profit dropped 21% on charges related to expired vax doses and lowered purchase orders.
Stolana: Over 8K crypto wallets lost $8M in SOL and USDC to hackers targeting the Solana ecosystem. The head-turning theft is the latest blow to a blockchain that's suffered repeated outages.
Care: CVS raised its forecast after beating sales and profit expectations. Customers surprisingly snapped up more Covid tests and cough/flu/cold meds. Now it’s planning to get into primary care.
Cut: Walmart, America’s largest private employer, started laying off corporate employees as a pullback in discretionary spending hits its bottom line. It’s also cutting prices to get rid of piled-up inventory.

Thursday

Jobless claims
Earnings expected from Block, Eli Lilly, ConocoPhillips, Duke Energy, Public Storage, Monster Beverage, Warner Bros. Discovery, Live Nation, DoorDash, Kellogg, Cloudflare, Expedia, AMC, Zillow, and Dropbox

Authors of this Snacks own: Solana and shares of Match, Walmart, Moderna, Block, Exxon, Warner Bros. Discovery, AMC, CVS, PayPal, Twitter, AT&T, Tesla, and Starbucks

ID: 2336967

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Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

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Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.