Tinder’s Tough Love Should Ultimately Serve Match Well

Match’s first-ever analyst meeting this week was an opportunity to win back investors’ hearts. That didn’t quite happen: Match issued long-term targets for revenue and adjusted earnings growth through 2027 that was in line with what analysts already projected, while also forecasting a low single-digit decline in direct revenue from Tinder next year that was below the roughly 2% gain Wall Street was expecting. A new $1.5 billion buyback and the company’s first quarterly dividend didn’t sweeten the pot enough; Match’s share price has tumbled 6% since the meeting Wednesday. 

Tinder remains the key issue. The 12-year-old app has amassed a base of 47 million monthly active users, making it nearly four times the size of Hinge, Match’s next-largest dating app. But that scale also makes Tinder fertile ground for bad actors and fake accounts. There is also the app’s long-running reputation as a hookup tool, which Match has been working hard to change. “The perception that Tinder is mainly for hookups has decreased 12 percentage points in the U.S. and the U.K. since our brand work began two years ago,” said Tinder Chief Executive Faye Iosotaluno at the analyst meeting. “We’re going to keep investing to drive home the message that Tinder delivers against many types of outcomes.” 

Tinder also will be investing heavily to improve the user experience. Coming changes include requiring face photos and a “liveness check”—a biometric screening tool that uses the camera on a user’s phone to verify authenticity. Tinder will deploy more powerful artificial intelligence to improve the quality of user matches, as well as a “double-dating” feature, where users can pair up with friends and match with other pairs for dates. The breadth of the company’s planned changes to Tinder caught notice: “We believe stale product has weighed on Tinder [monthly active user] growth and are encouraged to see differentiated features in the works,” Nathan Feather of Morgan Stanley wrote to clients. 

Smart changes, all. But they won’t be fast, and Iosotaluno has wisely set near-term expectations low. “I’d like to tell you we could see faster financial performance, but the reality is that these turnarounds take time,” she said. That has much of Wall Street in a holding pattern, waiting for signs of actual improvement in Tinder’s business. “We found the product vision compelling, but it will need to be paired with strong execution,” Feather wrote. 

Tinder and its dating-app rivals aren’t helped by the image of fatigue among daters who have tired of swiping. The easing of pandemic restrictions has revived in-person meetup opportunities; running clubs are apparently a dating hot spot now.   

Still, the world is getting more online, not less. That means dating apps—including the biggest one of them all—are here to stay. And Match is now trading around 14 times forward earnings, which is near its record low and 33% below the multiple it has averaged over the past three years, according to FactSet data. Shweta Khajuria of Wolfe Research said the stock’s latest declines “largely prices in the risk” of the company’s turnaround plan. 

Low expectations may give Tinder needed time to rekindle the flame. 

Write to Dan Gallagher at dan.gallagher@wsj.com