Investors could cash in on America’s epidemic of loneliness with Match Group Inc. (NASDAQ: MTCH). To explain, Match Group operates several online dating sites including the omnipresent Match.om, PlentyOfFish, the infamous Tinder, and Hinge.
The growth investor’s case for Match Group is simple, the number of single people is growing fast. For instance, the U.S. Census Bureau estimates there were 117.9 million single adults in the United States in 2019, Psychology Today reports.
That number rose from 115.8 million in 2018. Therefore, the number of potential Match customers grew by 2.1 million in a year.
Moreover, there are more singles globally. Additionally, the United Nations estimates singles comprise 13% of the world’s household, Psychology Today notes.
Finally, the coronavirus is closing and discouraging traditional places for finding such as dates including bars. Hence it could be an excellent time to investigate the Match Group.
Does Match Group Make Money?
Yes, Match makes some money. Notably Match Group (NASDAQ: MTCH) made a gross profit of $400.75 million on revenues of $544.64 million in the quarter ending on 31 March 2020.
Moreover, Match reported a quarterly operating income of $134.68 million and a quarterly common net income of $160.38 million 31 March 2020. Strangely, the operating income fell from $180.20 million on 31 December 2019 to $134.68 million three months later.
Conversely, Match’s common net income rose from $132.23 million at the end of 2019 to $160.38 million three months later. However, Match’s cash flow is falling.
How Much Cash does the Match Group Have?
For example, Match’s quarterly operating cash flow fell from $186.53 million on 31 December 2019 to $74.66 million three months later.
In contrast, Match’s quarterly ending cash flow grew from $99.23 million to $791.44 million in the same period. Unfortunately, Match reported a $263.98 million quarterly financing cash flow in the same period.
I think the financing cash flow shows Match borrowed money to finance its operations in the first quarter of 2020. Thus, Match could not make enough money from its business to cover its operating costs.
Finally, Match had $791.32 million in cash and short-term investments on 31 March 2020. That number grew from $465.68 million on 31 December 2019 and $224.85 million on 31 March 2019.
Thus, Match’s cash is increasing during a pandemic. Moreover, Match’s current assets grew from $675.34 million on 31 December 2019 to $1.055 billion on 31 March 2020. Thus, Match’s value is growing in a pandemic.
Is Match Group a Safe Stock?
Match Group (NASDAQ: MTCH) has experienced significant share value growth during the pandemic.
For instance, Mr. Market paid $84.19 for a share of Match on 2 January 2020; $106 for a share of March on 29 June 2020, and $105.67 on July 1, 2020. However, Match’s share price fell to $47.35 on 20 March 2020.
Thus, Mr. Market thinks the pandemic is good for Match. However; as I noted above, Match’s operating income and operating cash flow fell in the first three months of 2020.
Therefore, the thesis that the pandemic will increase demand for Match’s products could be wrong. To elaborate, I think people are using Match less because they cannot date the people they meet through Match’s services. Why pay money for a dating service when you cannot date?
Therefore Match’s performance does not validate the popular theories about it. Hence, Match is a risky stock without unproven growth potential.
Match is Overpriced
I think Mr. Market overprices Match. In particular, I think Match’s financial numbers do not justify the share price.
Additionally, I think there is no reason for ordinary people to buy Match stock because Match Group pays no dividend. Thus, I think Match offers ordinary investors nothing.
I advise investors to stay away from Match (NASDAQ: MTCH) because I think this stock could collapse soon. I believe Match is a terrible stock because I think it has no margin of safety and questionable growth potential.