A new complaint was filed against Match Group (MTCH) by shareholder (plaintiff) Sebastien Meslage on November 25, 2024, in the U.S. District Court for the Central District of California. The defendants in the complaint are the company, CEO Bernard Kim, and CFO Gary Swidler.
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The plaintiff alleges that he bought MTCH stock at artificially inflated prices between May 2, 2023 and November 6, 2024 (the “Class Period”). The plaintiff is now seeking compensation for his financial losses. To learn more about the lawsuit, click here.
Match Group owns a portfolio of popular online dating apps, including Tinder, Hinge, OkCupid, and Meetic.
The filed complaint alleges that during the Class Period, the defendants misled Match investors in violation of Sections 10(b) and 20(a) of the Securities Exchange Act.
Plaintiff’s Allegations
According to the complaint, Match intentionally misrepresented information in its financial statements submitted to the U.S. SEC (Securities and Exchange Commission). In particular, the plaintiff alleges that Kim and Swidler failed to exercise proper oversight and control over MTCH’s financial statements.
For instance, on May 2, 2023, Match released its Q1 2023 shareholder letter, in which it suggested that it intends to grow Tinder’s user base by reactivating lapsed users. Further, during the Q1 2024earnings callheld on May 8, 2024, Match’s executives disclosed that the company changed a policy that allowed users to be removed if moderators felt they were not “on the app for its intended purposes.”
The plaintiff alleges that in both these instances, the company downplayed the risks. In particular, Plaintiff alleges that the company was aware of the difficulty involved in reactivating lapsed users but failed to caution shareholders and analysts. Likewise, Match allegedly downplayed the risk related to its policy change, which led to a loss of at least two million active users on Tinder, though Match’s executives contended that it improved Tinder’s quality.
Match’s subsequent disclosures revealed that the company and the defendants made misleading statements.
Match’s Misrepresentations
In contrast to the claims made by Match and the other defendants, the company allegedly understated the challenges that affected Tinder, mainly the risk that the app’s monthly active user (MAU) accounts would not rebound by the time Q3 2024 results were reported.
The truth came out on November 6, 2024, when Match released its Q3 2024 shareholder letter, which showed that Tinder’s active user base plunged 9% year-over-year. Additionally, new user activations/reactivations and revenue-per-user missed expectations. During theearnings callheld the next day, the company acknowledged that it experienced “less progress” on Tinder MAU accounts than it anticipated.
In reaction to this news, Match’s stock tanked 18% on November 7.
To conclude, the defendants allegedly misled investors by understating the challenges related to its Tinder app. MTCH stock has declined about 11% year-to-date, underperforming the broader market and causing losses for shareholders.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
