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Investing.com -- In a note to clients Tuesday, Wolfe Research analyzed the potential for Match Group (NASDAQ:MTCH) to be taken private, estimating a possible share price of "$40 - $45/share if taken private."
The firm based its leveraged buyout (LBO) analysis on more conservative growth assumptions than those outlined in Match’s investor day guidance.
Wolfe notes that activist investors have been involved with Match for over a year, leading to revised forward growth expectations.
Given persistently high interest rates, the firm believes a take-private scenario remains a legitimate possibility if fundamentals do not improve.
"If fundamentals improve, shares get re-rated, and if they do not improve, there is a legitimate chance of the company being brought private," wrote the firm.
Wolfe’s model assumes a purchase price at 11x 2025 EBITDA, compared to the company’s current 9.5x multiple, with 4x leverage, a 4% five-year revenue CAGR, and an interest rate of 5.5%.
It also forecasts expanding EBITDA margins through 2030, reaching the low-40% range, with 75% free cash flow conversion. This results in a 10x terminal multiple, a 2.2x multiple on invested capital (MOIC), and an internal rate of return (IRR) of 14%.
On the earnings front, Wolfe expects Q4 revenue to be in line, Q4 EBITDA to beat, and Q1 guidance to be in line with potential upside to 2025 EBITDA. The firm highlights that Match has met or exceeded the midpoint of its revenue guidance in 8 of the last 12 quarters and EBITDA guidance in 11 of the last 12 quarters.
Looking ahead, Wolfe believes Q1 expectations are achievable, with stable engagement at Hinge offsetting neutral-to-negative trends at Tinder. The firm also sees product improvements and increased marketing spend helping to maintain user retention and top-of-funnel stability.