February 13, 2020 / 3:01 PM / 13 days ago

Activist hedge fund Kerrisdale betting Match.com's stock will fall

BOSTON (Reuters) - Activist investor Sahm Adrangi’s Kerrisdale Capital hedge fund is taking aim at Match Group Inc (MTCH.O), arguing that the company behind dating sites Match.com and Tinder will see its shares drop as it faces threats of increased governmental regulation.

“The thrill of the unexpected should be confined to going on a new date, not investing in the company that helped you find it,” Adrangi told Reuters in an interview.

“We are short Match Group and think the stock price is worth less.” He declined to say where he thinks the stock, which closed trading at $75.58 on Wednesday, should be trading.

Congress is investigating the safety of online dating apps amid complaints of underage use and the Federal Trade Commission sued Match Group last year over alleged “deceptive or unfair practices” used to get people to subscribe to the site.

“Federal investigations not only mean soaring legal costs and potential legal damages but more importantly, they will likely result in a lasting impact to Match’s business model,” Adrangi wrote in a 26-page report on the company that will be published on Thursday.

Match said it had no comment.

The man behind the $500 million Kerrisdale fund rose to fame as one of a small number of so-called short sellers who bet correctly that Chinese logging company Sino-Forest Corp was a fraud.

Last year Kerrisdale earned a 21% return as bets against companies, including molecular diagnostics firm CareDx (CDNA.O) and semiconductor and telecommunications equipment company Qualcomm (QCOM.O), paid off.

Kerrisdale’s report on Match Group comes as it and rival dating companies Bumble, Grindr, the Meet Group are due to respond to a series of questions recently submitted to them by the U.S. House Oversight and Reform subcommittee on economic and consumer policy.

The questions focus on users’ ages, age verification, and any complaints about assault.

Dating services generally require their users to be at least 18 years old.

Match Group, which went public five years ago and has a market capitalization of $21 billion, has seen its share price drop 8.8% so far this year. Last month Chief Executive Mandy Ginsberg said she was stepping down, citing health challenges.

Reporting by Svea Herbst-Bayliss; Editing by Tom Brown

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