BTIG Starts Match Group (MTCH) at Sell

BTIG initiated coverage on Match Group (NASDAQ: MTCH) with a Sell rating and a price target of $11. Analyst Brandon Ross thinks Tinder is cannibalizing the rest of its business.

"We believe the biggest risk to Match Group is what we call the “Tinder Catch-22” – which is that as MTCH improves the Tinder product, we believe it could not only cannibalize the rest of Match Group, but also make it more difficult to monetize Tinder via subscription. At the same time, the company must improve Tinder’s product to defend against potential outside competition," said Ross.

The analyst added, "The legacy Match Group businesses (non-Tinder) have struggled over the last 18 months, with decelerating revenue growth. Overall, the non-Tinder assets have lost paid subscribers in aggregate over the 12 months ended 3Q ‘15. We believe that the explosive growth of online daters with free profiles, particularly from Tinder, is cannibalizing the rest of the business. Profitability metrics at legacy Match businesses may optically improve over the next several quarters, due to the company’s acquisition of PlentyOfFish (POF) in July and technology investments. However, we believe that subscriber attrition will continue, and that these businesses are in secular decline."

For an analyst ratings summary and ratings history on Match Group click here. For more ratings news on Match Group click here.

Shares of Match Group closed at $15.20 yesterday.

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