FILE PHOTO: Match Group logo and stock graph are seen in this illustration taken, May 1, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) -Starboard Value has built a 6.6% stake in Match Group and is urging the dating app operator to explore a sale if it is unable to revitalize its business, the activist investor said.
The company's shares rose 8.7% to $34.80 on Tuesday.
Starboard is the third investor after Elliott Investment Management and Anson Funds Management to push for changes this year at Match, which has struggled with a post-pandemic slowdown in growth and delays in new features for key apps such as Tinder.
Match has not capitalized on its "enviable market position" and should cut costs and be more aggressive with share buybacks, Starboard's managing member Jeffrey Smith said in a letter late on Monday.
"If performance fails to improve, we believe changes must be considered, which should include a thoughtful examination of whether Match's best path forward would be as a private company," Smith added.
The Wall Street Journal first reported on the Starboard development.
Match has tried to turn around its business by rolling out new subscriptions and app updates. It also named a new CEO for Tinder in January.
Still, its shares were down about 12% this year as of Monday's close. The stock has declined for three straight years since 2021 amid competition from Bumble.
Match's payers, unique users from whom the company earns direct revenue, have declined for six straight quarters.
A spokesperson for Match said on Tuesday it remains focused on Tinder and Hinge and would "look forward to continuing our open dialogue with all of our investors, including Starboard".
In March, Match named two new board members after Elliott pushed for changes.
Anson Funds has met Match's board several times since building a stake in the company in March and has been pushing for a board refresh, increasing use of AI and sale of non-core assets in Asia, a source familiar with the matter said.
"Activists invest in a company to make money over the short term. It's therefore interesting that Starboard has reportedly told Match to consider going private. Such a statement might simply be a way to flush out potential bidders," Dan Coatsworth, investment analyst at AJ Bell, said.
(Reporting by Urvi Dugar and Jaspreet Singh in Bengaluru, Additional reporting by Kanjyik Ghosh and Shreya Biswas; Editing by Alan Barona and Shounak Dasgupta)
