An InvestorPlace analyst has suggested that investors should avoid IAC and Match Group stock, and that its new, lower valuation may not be an opportunity to buy.
IAC stock fell 18% following Facebook’s announcement, while MTCH fell 22%. IAC owns 81% of Match Group stock.
It’s possible that the decline in valuation has been an overreaction, the author notes, particularly in the case of IAC – the umbrella owns other properties including Vimeo and Expedia Group Inc.
Facebook may have trouble launching a service that requires extremely personal data, and it may target a slightly older demographic than Tinder or POF.
There is a good chance Match & IAC will recover as more details emerge, therefore.
That said, the analyst feels Match Group stock was overvalued before the drop, with prices rising rapidly since February this year. It may still be overpriced.
This high valuation, along with a number of Facebook-related risks, will probably stifle price increases for the foreseeable future.
One of the risks includes Tinder’s reliance on Facebook data to give users information about mutual connections.
The article reads: “Match may still grow. The online dating space continues to gain acceptance, and there may be enough room for Match.com, Tinder and Facebook.
“But the type of growth that is still priced in looks tougher to achieve. And that presents a short-term problem for both MTCH and IAC stock.”
Read more here.