💔 Match’s dating doldrums

Thursday, August 4, 2022 by Robinhood Snacks |
Tinder’s trampled spark (Peerapon Boonyakiat/Getty Images)

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

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

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

Yesterday’s Market Moves
Dow Jones
32,813 (+1.29%)
S&P 500
4,155 (+1.56%)
Nasdaq
12,668 (+2.59%)
Bitcoin
$23,282 (+1.26%)

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

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.
THE TAKEAWAY

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

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+.
THE TAKEAWAY

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.

Snack Fact of the Day

Airbnb made more money on July 4 than it has on any other day in its history, helping it notch a record quarter

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