MTCH – Market expectations are for record-high Uniform ROA, but management may be concerned about free cash flow, non-Tinder brands, and fees

December 28, 2020

  • Match Group, Inc. (MTCH:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 54.3x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management may be concerned about free cash flow conversion, non-Tinder brand performance, and app store fees
  • Specifically, management may lack confidence in their ability to maintain their current free cash flow conversion, grow in 2021, and sustain the revenue growth of non-Tinder brands. In addition, they may be exaggerating the growth potential of Hawaya, and they appear concerned about their ability to sustain revenue growth from their live streaming options. Finally, management may have concerns about changes to Google’s and Apple’s app store fees, further lockdowns in Europe, and political headwinds