1. Match Group Inc. (NASDAQ:MTCH)
TTM Net Income: $649.9 Million
5-Year Net Income CAGR: 3.79%
Market Capitalization: $9.42 Billion
Number of Hedge Fund Holders: 43
Match Group Inc. (NASDAQ:MTCH) is an American internet and technology company that owns and operates a global portfolio of popular online dating services including Tinder, Hinge, Match.com, Meetic, OkCupid, Plenty of Fish, and other dating global brands. With services available in over 40 languages, the company caters to diverse markets worldwide.
The company has announced its decision to exit live streaming services in its dating apps, including Plenty of Fish and Hyperconnect’s Hakuna app. This move is part of a strategy to optimize investments and focus on areas where the company has a competitive advantage. Although this decision will result in an annual revenue loss of approximately $60 million, Match Group Inc. (NASDAQ:MTCH) believes it will enhance margins and support growth in the long term.
To strengthen its key growth apps like Tinder, Hinge, and Azar, Match Group Inc. (NASDAQ:MTCH) plans to reassign talent from Hyperconnect that specializes in artificial intelligence (AI). The company is confident that leveraging AI will improve the overall dating experience and create new opportunities for innovation.
In the Q2 2024 earnings call, management shared that over the next year, Tinder plans to integrate AI to enhance the dating experience, aiming to create a more exciting and innovative platform. The company is testing new tools to improve authenticity. Tinder has already launched features like the Photo Selector to make choosing profile pictures easier. Meanwhile, Hinge is experiencing impressive growth, with direct revenue increasing nearly 50% year-over-year in Q2 2024. New features such as Your Turn Limits and AI-enabled photo tools are enhancing user interactions and helping daters connect more effectively.
Match Group Inc. (NASDAQ:MTCH) reported a total revenue of $864 million for the second quarter of 2024, which is a 4% increase compared to Q2 2023. Revenue per payer rose by 9%, although the number of payers decreased by 5% year-over-year. Tinder generated $480 million in direct revenue, reflecting a 1% growth. Hinge saw impressive growth with direct revenue reaching $134 million, up 48% from last year. Additionally, Hinge’s payer count increased by 24% to nearly 1.5 million, showcasing its strong performance.
Over the last five years, the company has achieved a compound annual growth rate (CAGR) of 3.79% in net income. Match Group Inc. (NASDAQ:MTCH) ranks among the most profitable stocks. Analysts are also bullish on MTCH. The 12-month median price target of $44.50 set by analysts indicates a potential upside of 20% from the current stock price.
According to Insider Monkey’s Q2 database of over 900 hedge funds, 43 hedge funds held stakes in Match Group Inc. (NASDAQ:MTCH) in the second quarter of 2024.
Overall, MTCH ranks first among the 7 most profitable mid-cap stocks to invest in. While we acknowledge the potential of Match Group Inc. (NASDAQ:MTCH), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MTCH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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