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On the rebound? Dating Tech, Metro; 8-11-19

Challenger bank Metro has made a remarkable return from life support, its share price rebounding by 65%. Up until now, the bank has had a terrible year, and even with the recent stock surge, share prices have lost 87% of their value. Metro’s share price now stands at 245.20p at the time of writing though, so is this a temporary resuscitation or is the bank back for good?

Metro’s woes had been well documented – an accounting slip up in January led to a regulatory probe, and then the failure to raise its £200 million bond was closely followed by the departure of founder and chairman Vernon Hill.

Rumours of a takeover by big four bank, Lloyds, however, have breathed life back into the challenger bank. While purely speculative, the word on the street is that the takeover would be mutually beneficial – Metro would gain the backing of a big bank, and due to the recent slump, Lloyds could pick up assets cheaply. How much truth is in that probably won’t be clear till the New Year but the speculation has certainly had a positive impact on Metro’s stock. The challenger bank is currently trading at a price to earnings ratio of 6.7, so if the takeover happens there could be some serious yields for investors willing to take a risk, but the recent volatility of the stock makes it tricky to call.

A tech disruptor that hasn’t fared so well this week is Tinder owner Match Group, which saw its shares fall 10 per cent after a disappointing sales forecast. Match Group, which dominates the dating domain owning Tinder, Plenty of Fish, OkCupid and Match.Com, revealed revenue expectations of between $545 billion and $555 billion, falling short of Wall Street expectations of $560 million. So can the dating app firm up its game or will investors continue to swipe left?

Overall, third quarter results for the dating app company were solid – its revenue rose 22% and its net income rose 16% annually. Tinder performed particularly well, reporting a 39% growth in annual subscribers and a huge 49% surge in revenue. OKCupid has also performed solidly, seeing strong growth through stable subscriptions in India and other overseas markets.

The fall in share value can probably be attributed to the soft Q4 guidance for the dating firm, along with a few other potential problems on the horizon. Match faces an FTC probe after controversy about fake accounts set up to aid advertising, which could cost the company up to $60 million. Facebook has also launched its own free dating feature, which is soon set to integrate with Instagram, potentially challenging Match’s portfolio.

With a good, global market share, though, and some high performing brands in its collection, Match Group could still have the chance to win back the hearts of its investors in the longer term.

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