JP Morgan analyst Cory A Carpenter reiterated the Overweight rating on Match Group, Inc. (NASDAQ:MTCH).

The analyst notes that while Match Group's fourth quarter outlook and initial 2025 forecast were disappointing, the company's AI-driven roadmap shows potential for reinvigorating user growth, particularly through Tinder's AI features.

However, the analyst points out that AI progress is still early, with only the Photo Selector feature fully implemented.

Despite concerns over Tinder's revenue and user trends, Carpenter is more optimistic about Match Group's free cash flow potential, which could help limit downside.

Still, improvement in user and revenue metrics for Tinder is necessary for any share price increase, which seems unlikely in 2025.

Also Read: Match Group Faces Investor Scrutiny Over Tinder Woes, Hinge Expansion Plans

The analyst notes that the company revised its revenue expectations downward due to a $15 million FX headwind and stable but lower new user growth on Tinder's iOS.

Management remains uncertain about the cause of this decline. Additionally, MTCH maintained its 36% AOI margin forecast for 2024 and paused share repurchases following its investor day, the analyst writes.

Carpenter highlights that Match Group's implied dividend yield of 2.4% is significantly higher than other internet companies like Google (0.4%) and Meta Platforms, Inc. (0.3%), which could appeal to value-focused investors.

The analyst anticipates that revenue estimates will be slightly revised downward (to a 6% CAGR, compared to the previous 4-6% guidance), while free cash flow per share estimates for 2027 may be slightly raised ($4.68 vs. the ~$5 guidance).

Price Action: MTCH shares are trading lower by 4% to $30.22 at last check Thursday.

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