Key Summary: On July 15, 2024, Starboard Value (6.6%) delivered a letter to Match Group expressing concerns about its underperformance and undervaluation, suggesting the Board explore all value creation options, including potential privatization. Starboard highlighted Match's significant discount compared to peers, trading at less than 8.5x 2024 free cash flow, and emphasized the need for operational improvements, particularly at Tinder, along with a more aggressive share repurchase program. They projected Match could generate $5.50 or more of free cash flow per share by 2026.Key Summary: On July 15, 2024, Starboard Value (6.6%) delivered a letter to Match Group expressing concerns about its underperformance and undervaluation, suggesting the Board explore all value creation options, including potential privatization. Starboard highlighted Match's significant discount compared to peers, trading at less than 8.5x 2024 free cash flow, and emphasized the need for operational improvements, particularly at Tinder, along with a more aggressive share repurchase program. They projected Match could generate $5.50 or more of free cash flow per share by 2026.
Market Cap: $8.5 billion| Match Group, Inc. engages in the provision of dating products.
On July 15, 2024, Starboard Value (6.6%) delivered a letter to the company expressing concerns about its underperformance and undervaluation. They suggested the Board explore all value creation options, including potential privatization. Starboard highlighted Match's declining share price and underperformance since its separation from IAC, noting it traded at a significant discount compared to peers. They emphasized the need for operational improvements, particularly at Tinder, and suggested a more aggressive share repurchase program to enhance shareholder value.
Valuation insight
Starboard stated, "Match is currently trading at less than 8.5x 2024 free cash flow, a level we believe dramatically undervalues the Company. At or around the current valuation, we believe Match should be using 75% or more of its free cash flow, plus some or all of the approximately $900 million of available capacity under its 3.0x net leverage target, to repurchase shares. These buybacks would enable Match to shrink its share count, and, if coupled with the operational improvement opportunities outlined above, these buybacks can significantly accelerate free cash flow per share growth. We believe there is no better use of cash for Match than repurchasing its own shares at this level. We believe Match can generate $5.50 or more of free cash flow per share in 2026."
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