Match Group, the parent company of Tinder and Hinge, is facing a campaign from activist investors who are calling for the dating app giant to either overhaul its business or consider taking it private.
Starboard Value said on Tuesday it had acquired a 6.6 percent stake in Match Group and is in discussions with the company and its board about ways to improve profitability and cut costs, Jeff Smith, head of the activist fund, said in the letter.
Smith argued that Tinder suffers from a “lack of innovation” that is hindering the company’s growth, despite having around 10 million paying subscribers.
“Despite Match’s enviable market position and attractive business profile, the company’s stock has significantly underperformed the market since its separation from its former parent, IAC, in July 2020,” Starboard’s Smith said in the letter.
“If performance does not improve, we believe changes should be considered, which should include carefully considering whether the best path forward for Match is to become a private company,” the letter added.
Match Group’s shares rose about 8% in early trading after the letter surfaced.
The Wall Street Journal first reported the news. With a push.
The letter noted that Match Group’s share price has fallen nearly 70% over the past four years, despite a broader stock market rally.
The company has struggled with increasing competition from rival dating apps such as Bumble, while its user base has shrunk as consumers cut back on spending amid economic uncertainty.
Starboard said Match Group should undertake share repurchases to “significantly accelerate free cash flow per share growth.”
“We believe there is no better use of Match’s cash than share repurchases at these levels,” the letter said.
A Match spokesperson said the company is “committed to executing on key initiatives including driving the growth of Tinder, continuing the impressive expansion of Hinge, maintaining good financial discipline, and returning capital to shareholders.”
The Post has reached out to Match Group for comment.
Starboard’s move adds pressure to Match Group’s leaders, who faced an activist campaign from Elliott Management earlier this year.
Like Starboard, Elliott argues that a lack of product innovation is stifling Tinder’s growth.
In response to Elliott’s campaign, Match added Instacart executive Laura Jones and Zillow co-founder Spencer Rascoff to its board of directors.
Starboard has previously waged activist campaigns after taking stakes in companies like Salesforce and Splunk, which was sold to Cisco last year in a megadeal worth $28 billion.
With post wire
