Match Group has announced that Starboard has acquired a 6.5% stake in the company.

• Starboard Value, owned by Jeff Smith, holds a more than 6.5% stake in Match Group and is urging the company to prioritize product innovation and margin enhancement.
• If a turnaround can't be achieved under CEO Bernard Kim, Starboard suggests the company should consider going private.
• The stock price of the company has dropped over 80% from its peak in 2021, and several investors are showing interest in the company.

Online dating company has a roughly 6.5% stake from Starboard Value, which is pushing for changes to improve margins or going private.

Smith wrote to Kim and the board in a letter on Monday that cost cuts and product innovation could drive revenue growth at the company. Smith has been discussing Match's plans with management, as per the letter, which was obtained by CNBC.

The stock price of Match, the owner of popular dating apps such as Tinder and Hinge, has dropped 12% this year, leaving it over 80% below its peak value in 2021. The company has been facing challenges with leadership changes and a decline in user base.

On Monday, the stock experienced a nearly 9% increase in extended trading following a Wall Street Journal report about Starboard's investment.

Tinder experienced rapid growth for several years but has recently slowed down due to a lack of innovative ideas. The activist does not advocate for a management change and believes that Kim, who previously led Tinder and was previously president of Zynga, can drive innovation at the company.

The activist claims that any improvement in the turnaround would necessitate an increase in the operating income margin. In the first quarter, Match's operating income margin decreased to 21% from 25% the previous year. The adjusted operating margin was 33%, which Starboard believes can be improved to 40% if the company implements effective cost-saving measures.

If Match fails to broaden its business, it should consider going private, Smith advised, while highlighting strong growth in Hinge and promising signs from its "Emerging" apps portfolio.

The company was urged by Starboard to use its balance sheet for share buybacks. No immediate comment was provided by Match's representatives.

Match has faced pressure from multiple activists, including Elliott Management and Anson Funds, who have both amassed significant stakes in the company. Elliott settled with the company, resulting in the addition of two directors to the board.

Elliott has a successful track record as an activist, particularly in technology. He has taken positions in Salesforce, Splunk, and other companies. After a number of activists, including Elliott, took stakes in Salesforce, the company made significant cost cuts. Last year, Splunk was acquired by in a $28 billion deal.

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