Match Group short sellers not looking for long-term commitment

Reuters News
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Posted: Jan 05, 2016 12:35 PM

By Noel Randewich

SAN FRANCISCO (Reuters) - Short sellers have been having trouble committing to Match Group Inc since the owner of the popular dating website Match.com and mobile app Tinder went public in November.

The crown jewel of media mogul Barry Diller's properties, Match's stock has fallen 8 percent from the close of its first day of trading on Nov. 19, but following over a month of volatile trading, it is still up 13 percent from the $12 per share price set by underwriters in its initial public offer.

That has led to a nervous few weeks for traders betting Match would fall further and join other freshly listed stocks struggling to keep sagging stock prices above their IPO levels, including Pure Storage and Etsy.

The amount of Match's stock loaned out to short sellers has dropped in recent days to about 4.5 million shares from 6.4 million just before Christmas, according to data from S3 Partners, which advises institutional investors.

Soon after the November IPO, short sellers piled into Match, only to cover positions in mid-December as the stock made gains, according to S3.

Short sellers borrow shares and then sell them, hoping to repurchase them at a lower price and then return them to their owner. In the meantime, they must also pay interest to the owner.

Diller's IAC/InterActiveCorp sold Wall Street 33 million shares of Match, equivalent to about 14 percent of the company, which short sellers may struggle find enough shares to borrow.

This week, short sellers have paid a annualized interest rate of 4 percent to borrow Match shares, down from as much as 35 percent soon after the IPO, according to S3.

Shares of Match, which came to market after several other companies were forced to discount or delay IPOs, rose 1.7 percent to $13.59 on Tuesday.

Following its IPO, Match Group Chairman Greg Blatt in December took on the added role of CEO, replacing Sam Yagan, who joined Match Group' board.

Also in December, top-line IPO bookrunners initiated coverage of Match's stock, with JP Morgan rating it "neutral" with a $16 price target and Bank of America recommending the shares with an $18 price objective.

Goldman Sachs, which was not part of the IPO, recommended selling Match's stock and assigned it a $12 price target, saying that online dating sites have limited growth opportunities.

With Tuesday's gains, Match trades at about 20 times expected earnings.

(Reporting by Noel Randewich; Editing by Alistair Bell)