Facebook and Match Group – How does Facebook’s crises affect Match Group?

Abstract

Over a billion active members make Facebook the most well–known social media platform. As the Goliath of social media, do niche social media companies emulate Facebook? The world’s leading provider of online dating products, Match Group Inc’s (Match) portfolio consists of over 45 brands each designed to increase their users’ likelihood of finding a romantic connection. The objective of my research is to determine the extent of Facebook’s effect on Match.
As a third-party with whom Match does business, Facebook’s privacy issues have both direct and indirect implications for Match. In June 2018, a Facebook bug changed privacy settings of up to 14 million users. In September 2018, hackers exploited the bugs to access around 50 million Facebook profiles. Then in December 2018, another Facebook privacy breach exposed private photos of up to 6.8 million users.
My project analyzes Match’s Balance Sheet, Income Statement and Statement of Cash Flows, including horizontal analysis of the company’s quarterly and annual reports from 2016 to 2018. I evaluate the impact of these privacy-related news stories on Match. I estimate cumulative abnormal returns (CAR) for the company around Facebook's announcements of data breaches. I also utilize the five–factor DuPont Analysis to reveal a deeper understanding of Match’s return on equity.
The occurrence of Facebook’s privacy issues had an adverse effect on Match’s financial condition and results of operations.
Faculty Sponsor: Sid C. Bundy, Assistant Professor of Accounting