SEEKING ALPHA – May 2 – Match Group is an underappreciated growth story with a market capitalization of $5.1B and operating income of $306M last year. Based on a 20X multiple of 2017 operating earnings (~$400M), Match Group has 50%+ upside. Out of all the brands that Match owns, Tinder stands out the most. Tinder grew its PMC (Paying Member Count) 119% in 2016, to ~1.8M people. This growth isn't showing any signs of stopping, Tinder's PMC grew 18% quarter over quarter from Q3 to Q4 (1.386M to 1.631M). Although Match Group has 278.3M total shares outstanding, its float is much smaller. The company was spun out of IAC in late 2015, and its original parent still owns ~80% of the shares outstanding.The biggest drag on Match's valuation has been the company's debt-load. At the end of 2016, Match still had $1.2B in debt, with only $254M of cash. However, this leverage ratio could change quickly. Match paid down $40M in debt in Q4, and has been simultaneously boosting its cash position. As earnings and cash-flow continue to grow, Match will quickly begin paying off its debt-load, and the company's earnings multiple will expand, making shares very attractive at today's price of $18.50.
