Jefferies Downgrades Match Group Due to Tinder's Decline

Investing.com – Jefferies analysts have downgraded Match Group (NASDAQ:MTCH) from Buy to Hold primarily due to challenges with Tinder's monthly active users (MAUs). This follows a previous downgrade from New Street Research, which lowered its rating to Neutral earlier this week.

Shares of Match Group fell by 2% on Tuesday.

Tinder has seen a decline of 3 million MAUs since Q1 2024, prompting concerns about new verification requirements potentially hampering future growth, according to Jefferies. The investment bank also adjusted its price target for Match Group from $40 to $32.

Analysts noted a shift in user behavior, with consumers moving away from the traditional "swipe" model to "prompt"-based dating platforms. This shift is contributing to Tinder's decline, despite its substantial user base, which is four times larger than Hinge's MAUs and six times its paying users.

While Hinge is experiencing growth, it is currently too small to compensate for Tinder's downturn, leaving Match Group with a projected revenue CAGR of around 4%. Tinder's MAUs dropped from 50 million in Q1 to 47 million, and there is skepticism regarding the app's recovery.

The introduction of new features aimed at enhancing Tinder’s ecosystem may meet resistance from users reluctant to go through verification processes. Management anticipates improved MAU trends by the second half of 2025, with further acceleration into 2026 and 2027.

Despite its brand recognition, particularly among the 18-24 age group, Tinder's lack of innovation has disappointed both investors and users. Jefferies analysts remarked, “Tinder has introduced new features like stronger verification and AI-based dating, but doubts remain about its recovery potential compared to Hinge.”

Hinge continues to show promise for Match Group, projecting a 20% CAGR over three years and potential for margin improvement to over 35%. The company also plans to return 100% of its free cash flow to shareholders; however, analysts question the ability of these factors to substantially affect the stock in the near term due to ongoing issues with Tinder’s user engagement.

Earlier, New Street Research downgraded Match Group to Neutral, citing a lack of clarity regarding Tinder's monetization improvements.