I am adding to my MTCH positionI already own a bunch of MTCH, and to be honest, at higher prices. But I am adding to my position at this point for reasons that are both technical and fundamental.
On the technical side, the stock has been strong over the past week, but is still in a declining 1-month trend. That said, both the upper edge of the regression trend and the lower end of the post-earnings gap are close at hand. I expect that the stock will break out of the declining trend and into the earnings gap, which should be good for at least 10% to $36.
On the fundamental side, I believe that analysts are missing the point on online match-making. The big caveat mentioned by bears against both MTCH and competitor BMBL is that growth has evaporated of late. While that's true, I am not overly concerned about that. The reason is that (a) the company is profitable, with a not-too-shabby 16-18% ROIC in each of the last 4 quarters, and (b) MTCH is the heavyweight in the online matchmaking business, and I'd argue that this industry confers big benefits to dominant incumbents. First, it's a network-type business, where the likelihood to find an online match depends on the number of other users. So, large networks are inherently more attractive. But secondly, I believe there's also a flywheel effect where more customers lead to more match-making data, and therefore to improved match-making models, better customer satisfaction, and therefore, again, to more customers.
