NEW YORK - Investment firm Starboard Value LP, which owns approximately 6.6% of Match Group, Inc. (NASDAQ:MTCH), has communicated with Match Group's leadership, advocating for initiatives aimed at enhancing shareholder value. Amid Match's long-term share price underperformance, Starboard has outlined a potential for the online dating company to generate over $5.50 in free cash flow per share by 2026.
In a recent letter to Match's CEO, President, and CFO, as well as its Board of Directors, Starboard suggested actionable steps to improve growth, profitability, and capital allocation. The investment adviser emphasized Match's strong market presence in the online dating sector and proposed that the company should consider a sale if it struggles to execute the recommended initiatives effectively.
Starboard's approach to investment involves active engagement with management teams and boards to identify and implement value-unlocking strategies. While the firm recognizes Match's leading position in the growing online dating market, it urges the company to remain open to strategic alternatives to realize its full potential and enhance shareholder returns.
This move by the investment adviser is based on a press release statement.
InvestingPro Insights
As Match Group, Inc. (NASDAQ:MTCH) navigates the recommendations by Starboard Value LP, investors may find the latest metrics and insights from InvestingPro particularly illuminating. Match Group boasts a strong Piotroski Score of 9, indicating robust financial health and operational efficiency. This complements Starboard's confidence in Match's market presence and the potential for enhanced shareholder value.
In terms of capital allocation strategies, Match Group's management has been proactively buying back shares, which could be a sign of the company's belief in its undervalued stock and commitment to returning value to shareholders. This aligns with the initiatives suggested by Starboard to improve growth and profitability.
InvestingPro Data also reveals that Match Group is trading at a P/E ratio of 14.29, with an adjusted P/E ratio for the last twelve months as of Q1 2024 at 13.81. This positions the company attractively relative to near-term earnings growth, with a PEG ratio over the same period at a low 0.11, suggesting potential for investment value over time.
The company's financial stability is further underscored by the fact that its liquid assets exceed its short-term obligations, providing flexibility for strategic initiatives. Additionally, Match Group has demonstrated a solid performance with revenue growth of 8.17% over the last twelve months as of Q1 2024, which could be a precursor to the $5.50 in free cash flow per share by 2026 as envisioned by Starboard.
For investors interested in deeper analysis and additional insights, InvestingPro offers more tips on Match Group, which can be accessed at https://www.investing.com/pro/MTCH. Utilize the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing access to an expanded array of InvestingPro Tips that could further inform investment decisions. Currently, there are 6 additional tips available for Match Group on InvestingPro, ranging from analyst predictions to profitability outlooks.
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