Victor Anthony: Tinder Still 'Killing It'

Shares of Match Group Inc MTCH were trading up more than 12.6% on Wednesday, following the announcement of the company’s first quarter financial results. After the bell rang on Tuesday, the dating services provider reported EPS of $0.11 on revenue of $285.28 million - up 21.4 percent year-over-year, beating the Street’s consensus by $0.03 and $3.53 million, respectively.

Following the strong results, Axiom’s Senior Analyst Victor Anthony reiterated a Buy rating and $18 price target on the stock, arguing that there is still plenty of room for upside.

The analyst highlighted the management team’s “good job refuting the Tinder cannibalization and the pricing pressure bear theses on the stock.” While the expert recognizes that certain brands are still weak and Tinder’s long-term impact is still a source of concern, he declared to be encouraged by the better performance of the core Match brand, the signs of improvement that management said the mobile conversion problem was showing, and the team’s confidence that core sub growth will actually return in 2017.

The company pointed out that growth in paid subs, ex-Tinder, reached the mid-single digits and should continue to ameliorate towards the end of the year. Moreover, the repot assured, “the Meetic performance was strong and the case study there gives added confidence that the North American turnaround could be successful.”

However, it seems like it’s still all about Tinder at the time. Management said the app is “killing it,” adding that they expect sub growth to double this year – which would support Axiom’s April thesis about it being “The Fastest Growing Dating App In The World.”

“The ad opportunity on Tinder, while delayed, is likely to be a meaningful contributor in 2017. In all, we see an opportunity for Match to post 2017 results significantly above consensus on revenues, margins, and free cash flow,” Anthony concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.