Online dating company Match Group (NASDAQ: MTCH) released its fourth-quarter earnings report on Monday and investors were stunned by the results. Match missed its revenue and EPS forecasts as well as downgraded its full-year guidance. Shares plunged more than 20% in pre-market trading today following the announcement, erasing over $2 billion in market value in less than an hour of trading. We’re going to dig into the details and explain what happened with Match, including why investors are so worried about the company’s near-term outlook and what risks there are to owning shares of Match Group stock today.

Stocks of the Dating Site fell 22% in Extended Trading on Tuesday

Stocks of the Dating Site fell 22% in Extended Trading on Tuesday
Image Source: Wall Street Journal

The dating site’s shares fell 22% in extended trading on Tuesday after it reported weaker-than-expected second-quarter revenue and issued weaker-than-expected guidance. Here’s what the company has been up to. Revenue: $795 million compared to Refinitiv’s estimate of $804 million

for the quarter, Match – whose properties include Tinder, OkCupid, and Hinge – recorded earnings of 52 cents per share, up 12% from the same time period last year. Additionally to trailing estimates for the second quarter, Match provided a forecast of $790 to $800 million for the third quarter, which results in no growth for the period and is well below analyst estimates. The company said its forecast takes a hit from foreign exchange rates.

Match’s shareholder letter says

Match's shareholder letter says
Image Source: The Business Journals

According to Match’s shareholder letter, it saw weakness in its live streaming business and in Japan, which has yet to recover meaningfully since the lifting of Covid restrictions. Additionally, the company reported that in the second half of 2021, its business will benefit from the availability of Covid-19 vaccines and increased social activity.“We are not seeing a similar surge of activity in 2022,” the company said.

The number of paid users increased 10% to 16.4 million, and the revenue per paid user went up 3% to $15.86.Tinder revenue has increased by 13%. A settlement involving Tinder led to a $441 million payment and $7 million negative free cash flow.

In contrast to this current downturn, Match Group’s stock price is only down by 42% so far this year, including after-hours.