Match Group Inc.’s stock has seen the online dating company’s new chief executive detail the slowdown of its most popular product, Tinder, and temporarily bolster new initiatives such as Tinder-based virtual currency and “metaverse” dating. After deciding to stop, it plummeted on Tuesday.
match
MTCH,
reported a loss of $31.86 million (11 cents per share), down from a profit of 46 cents per share a year ago. Earnings increased from $707.8 million a year earlier to $794.5 million, but fell short of analyst estimates.
According to FactSet, analysts expect earnings to average 57 cents per share on sales of $804 million. Shares fell more than 20% in after-hours trading shortly after the earnings release, closing 4.3% higher at $76.71.
A major reason for the surprising loss was a $217 million write-down on its acquisition of Asian dating company Hyperconnect, which is looking to integrate its “metaverse” functionality. Match paid the company more than $1.7 billion last year, but new chief executive Bernard Kim said it was slowing development and spending.
“We believe the Metaverse dating experience is critical to attracting the next generation of users, and HyperConnect has continued to innovate in this area. Given the uncertainty about whether or not it will work, and the more difficult operating environment, we have instructed the Hyperconnect team to iterate, but we are not making any significant investments in the metaverse at this time,” said Kim. said. He wrote in a letter to shareholders on Tuesday. “We will continue to carefully evaluate this space and will consider moving forward when the time is right when we feel the overall opportunity is clearer and we have the services well-positioned to succeed. ”
Match has grown steadily over the years thanks to Tinder’s growing number of paying users, but that effort also hit a speed bump. He will be fully integrated into the team at Tinder’s main office in Los Angeles to oversee the progress of the business until completion.”
One of his first moves is to abandon the introduction of cryptocurrency-like rewards on the platform.
“Due to the mixed results of testing Tinder Coins, we have decided to take a step back and revisit the initiative so that we can more effectively contribute to Tinder’s revenue,” Kim said in the letter. . “We will also look further into virtual goods as they become a real engine for his next stage of growth on Tinder and help unlock untapped power users on the platform.”
Kim offered no hope that Match’s struggles would turn around anytime soon. For the third quarter, he led his $790 million to his $800 million earnings, which were broadly flat from both a year-over-year and quarter-over-quarter perspective. On average, analysts expect third-quarter earnings to come in at $883 million, according to FactSet.
The year-end news hasn’t been all that great, but Kim hopes Match can cut back on marketing and hiring significantly to improve bottom line.
“In the fourth quarter, we expect limited improvement in year-over-year top-line growth compared to the third quarter as teams focus on execution on current product initiatives into 2023. We expect margins to improve slightly as we maintain discipline in our marketing spending and hiring,” he wrote.
Match Group executives will hold a conference call on Wednesday at 8:30 am to discuss the results.
Match Group shares are down 42% so far this year, with the S&P 500 index
SPX,
decreased by 13.6%.
