Why Match Group Stock Lost 16% in September

A Federal Trade Commission lawsuit put the brakes on the online dating website operator’s 2019 rally.

| More on:
Arrow descending on a graph

Image source: Getty Images.

What happened

Match Group (NASDAQ: MTCH) shares lost ground last month, shedding 16% even as the S&P 500 rose by 2%, according to S&P Global Market Intelligence. That decline only put a mild dent in longer-term investors’ gains, however, given that the stock still ended September up by more than 70% for 2019 overall.

So what

Most of the decline came late in the month after the Federal Trade Commission announced a lawsuit against the company. Among other things, the FTC alleges the company has been “using fake love interest ads to trick consumers into paying for a Match.com subscription.” In essence, it has allegedly been tempting them with the prospect of exchanging messages with a genuine romantic prospect, when the contacts were coming from accounts already flagged as likely fraudulent.

The FTC doesn’t allege that Match Group was behind the actual romance scams, but rather that it used known scammers’ messages to entice free trial users to sign up for the paid service. Match.com users can’t respond to messages they’ve been sent unless they subscribe.

Now what

It’s unclear how large a financial hit the tech stock would take if it were to lose this lawsuit. The more important question is to what extent Match Group’s subscription growth has been coming from efforts that result in a poor user experience, which would open it to challenges from Facebook (NASDAQ: FB) and others looking to take market share in the online dating business.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Demitrios Kalogeropoulos owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook and Match Group. The Motley Fool has a disclosure policy.

More on Tech Stocks

Family relationship with bond and care
Dividend Stocks

TFSA Investors: 3 Cheap Canadian Stocks for Retirees

These three Canadian stocks are super cheap for retirees looking for a great buy that will last the test of…

Read more »

consider the options
Tech Stocks

Better Buy (2024 Edition): Shopify or Nvidia Stock?

Shopify (TSX:SHOP) isn't the only red-hot tech stock in town that could add to recent gains.

Read more »

Illustration of bull and bear
Tech Stocks

A Bull Market Is Coming: 3 Growth Stocks That Could Thrive

Given their high growth prospects and cheaper valuation, these three growth stocks would be an excellent buy as the market…

Read more »

online shopping
Tech Stocks

2 Stocks That Saw Major Black Friday Boosts

These stocks saw a pretty amazing Black Friday, a sign that both are probably going to be a great buy…

Read more »

Growing plant shoots on coins
Tech Stocks

2 Top Growth Stocks in Canada for December 2023

Here are two of the best Canadian growth stocks you can buy in December 2023.

Read more »

Dots over the earth connecting the world
Tech Stocks

Is Constellation Software Stock Worth a Buy in December?

Constellation stock (TSX:CSU) is up 46% in the last year alone, but after an earnings miss should investors still consider…

Read more »

Man data analyze
Tech Stocks

Beyond SPY Stock: Top U.S. Picks for Canadian Investors

Venturing beyond SPY stock opens up a world of investment possibilities for Canadian investors. Top U.S. picks include Apple.

Read more »

edit Colleagues chat over ketchup chips
Tech Stocks

Is Now the Right Time to Buy Tech Stocks Trading Cheaply?

Tech stocks are still cheap across the board, but these two are the best of the best in my view,…

Read more »