Match Group falls even as Wells Fargo upgrades, says fundamentals 'very much intact'
Match Group (NASDAQ:MTCH) shares fell early Monday even as investment firm Wells Fargo upgraded the online dating service company after it reported "solid" first-quarter results.




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Analyst Brian Fitzgerald upgraded Match (MTCH) to overweight from equal weight, but cut the per-share price target to $115 from $140, noting that even though 2022 revenue growth is expected to be closer to 15% than 20% and a new CEO provides uncertainty, the choice, Bernard Kim, is seen as a "strong addition."
Additionally, for the first-time, Match (MTCH) disclosed its company monthly active users, which pushed back on a thesis that it was seeing declining user engagement.
"While we expect crosswinds to continue (likely for multiple quarters), we view fundamental opportunity as very much intact and valuation as compelling at current levels," Fitzgerald wrote in a note to clients. 
Match Group (MTCH) shares were down more than 1% to $73.29 in premarket trading on Monday.
Fitzgerald called out several positives from Match Group's (MTCH) first-quarter, as the $799 million in first-quarter revenue was "slightly higher" than Wall Street estimates of $795 million. The company saw strength in its Tinder unit, as well as paying subscribers, led by 38% year-over-year growth in Asia-Pacific and 16% year-over-year in the Americas.
Looking ahead, Fitzgerald said the guidance provided by Match Group (MTCH), which may have disappointed some investors, was "better than feared," when taking into account global economic concerns and foreign exchange headwinds.
Fitzgerald also highlighted the fact that the company's management pointed out a "strong rebound" in Tinder/Pairs users in Japan, the company's second-largest market, on its earnings call. Match (MTCH) is also making a number of product innovations, including in-app virtual currency, monetizing features aimed at female users and integration of Hyperconnect tech, as well as Hinge, which is expected to reach $300 million in revenue this year.
Potential headwinds include growth in Europe, due in large part to the Russian invasion of Ukraine, concerns over marketing opportunities and fees from app stores, with Google (GOOG) (GOOGL) recently enforcing its in-app purchasing policy, which could increase costs by roughly $6 million per month, Fitzgerald added.
Last week, a number of analysts cut their price target on Match Group (MTCH) following the company's first-quarter report.