Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Credit

<ul><li>Bumble is the second-largest player in the online dating market, right behind Match Group.</li><li>The company had a decent start to 2022 with lucrative revenue growth and a total group revenue that was driven by a continuous strength in the Bumble app.</li><li>The management continued its acquisition-led geopgraphic expansion and acquired famous Gen Z dating app, Fruitz to expand into Europe.</li></ul>

Bumble is the second-largest player in the online dating market, right behind Match Group.The company had a decent start to 2022 with lucrative revenue growth and a total group revenue that was driven by a continuous strength in the Bumble app.The management continued its acquisition-led geopgraphic expansion and acquired famous Gen Z dating app, Fruitz to expand into Europe.

Bumble Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<ul>
<li>Match is down 52% over the past 6 months and at $71, Match trades at a 5% FCF yield, ~17x Fwd EBITDA, for ~20% growth / ~35% EBITDA margin</li>
<li>Covid restrictions lifted in Japan (2nd biggest market) should be tailwind for 2H22</li>
<li>New CEO from Zynga brings unique mobile monetization skillset ideally suited for coming Tinder Coins summer launch.</li>
</ul>


Match is down 52% over the past 6 months and at $71, Match trades at a 5% FCF yield, ~17x Fwd EBITDA, for ~20% growth / ~35% EBITDA margin
Covid restrictions lifted in Japan (2nd biggest market) should be tailwind for 2H22
New CEO from Zynga brings unique mobile monetization skillset ideally suited for coming Tinder Coins summer launch.


Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p>While the battle for payment systems between Epic and Apple will continue with Epic filing an appeal, the rather mild ruling against Apple has some interesting implications, as do the responses of both companies to the ruling. In the context of regulatory upheaval in the key gaming space in China and a slew of regulatory moves in other Asian countries such as Japan and South Korea, there is plenty worth mulling as new winners and losers could emerge.</p>

While the battle for payment systems between Epic and Apple will continue with Epic filing an appeal, the rather mild ruling against Apple has some interesting implications, as do the responses of both companies to the ruling. In the context of regulatory upheaval in the key gaming space in China and a slew of regulatory moves in other Asian countries such as Japan and South Korea, there is plenty worth mulling as new winners and losers could emerge.

<p>We think Match’s stock pulled back on the quarter due to lower relative guidance on the recently acquired Hyperconnect business and a lower EBITDA guidance than expected, given that Google has pushed out pending algorithm changes to next year (removing a marketing cost headwind). But there is an ongoing lawsuit regarding Tinder’s valuation brought by its founder Sean Rad, where Rad accuses IAC and Match of suppressing Tinder’s valuation. There are an extra $15M in legal costs here. Bottomline…this is an irrelevant figure and not worthy of the big selloff post earnings. We think the key drivers of this stock are Tinder and increasingly Hinge and these are as strong as ever.</p><p>Part of the reason we remain bullish on Match is that inevitably, the pandemic will get under control…and people will return to wanting to meet people…but the delta variant has definitely thrown a monkey wrench into the timing of Match’s inevitable resurgence. Good opportunity to add on this earnings pullback. As we have said over the past few quarters...Match is rarity in midcap internet properties – a wildly profitable platform quasi-monopolist which trades for a rightfully high EBITDA multiple and offers few entry points – much like Adobe in software. This is a good entry point.</p><p></p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

We think Match’s stock pulled back on the quarter due to lower relative guidance on the recently acquired Hyperconnect business and a lower EBITDA guidance than expected, given that Google has pushed out pending algorithm changes to next year (removing a marketing cost headwind). But there is an ongoing lawsuit regarding Tinder’s valuation brought by its founder Sean Rad, where Rad accuses IAC and Match of suppressing Tinder’s valuation. There are an extra $15M in legal costs here. Bottomline…this is an irrelevant figure and not worthy of the big selloff post earnings. We think the key drivers of this stock are Tinder and increasingly Hinge and these are as strong as ever.Part of the reason we remain bullish on Match is that inevitably, the pandemic will get under control…and people will return to wanting to meet people…but the delta variant has definitely thrown a monkey wrench into the timing of Match’s inevitable resurgence. Good opportunity to add on this earnings pullback. As we have said over the past few quarters...Match is rarity in midcap internet properties – a wildly profitable platform quasi-monopolist which trades for a rightfully high EBITDA multiple and offers few entry points – much like Adobe in software. This is a good entry point.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Match 2Q21 Earnings: Still Waiting on the Resurgence

<p>The 2Q21 guidance is overly conservative…growth inline with 1Q21 despite a far easier comp (500bps revenue growth decel…17% comp in Q1 vs. 12% in Q2) and an EBITDA guidance calling for a 300bps EBITDA margin contraction…which seems massively unlikely given all the ARPU supportive commentary. Management is being cautious to set a low bar given the huge disruptions currently in India, Latin America , and Japan, its key global growth markets. Keep the eye on the ball… Match is still driven by the biggest US urban centers…and these markets are reopening fastest. We’ve said the past two quarters that Match is rarity in midcap internet properties – a wildly profitable platform quasi-monopolist which trades for a rightfully high EBITDA multiple and offers few entry points – much like Adobe in software. The fact that the company’s EV/EBITDA multiple is lower today (36x) then it was 6 months ago (42x) and we are 6 months closer to not just a normalization, but likely massive acceleration in the business means Match is really much cheaper than it appears and investors have a great entry point.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

The 2Q21 guidance is overly conservative…growth inline with 1Q21 despite a far easier comp (500bps revenue growth decel…17% comp in Q1 vs. 12% in Q2) and an EBITDA guidance calling for a 300bps EBITDA margin contraction…which seems massively unlikely given all the ARPU supportive commentary. Management is being cautious to set a low bar given the huge disruptions currently in India, Latin America , and Japan, its key global growth markets. Keep the eye on the ball… Match is still driven by the biggest US urban centers…and these markets are reopening fastest. We’ve said the past two quarters that Match is rarity in midcap internet properties – a wildly profitable platform quasi-monopolist which trades for a rightfully high EBITDA multiple and offers few entry points – much like Adobe in software. The fact that the company’s EV/EBITDA multiple is lower today (36x) then it was 6 months ago (42x) and we are 6 months closer to not just a normalization, but likely massive acceleration in the business means Match is really much cheaper than it appears and investors have a great entry point.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Match 1Q21 Earnings: Looking for an Opening

United States

Bumble Inc. develops application software. The Company offers an online dating application that enables users to meet new people for dating, friendship, and relationship. Bumble serves customers worldwide.

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Bumble (BMBL US)

Bumble Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

Bumble is the second-largest player in the online dating market, right behind Match Group. The company had a decent start to 2022 with lucrative...

Baptista Research

Revisiting Long Ideas: Match Group

We think Match Group offers an attractive entry point. Always highly valued, but it’s a highly profitable (35% EBITDA margins) platform with a...

Aaron Gabin

Not an Epic Ruling Against Apple

We examine developments in Epic's legal battle with Apple to identify potential long-term implications and winners and losers.

Mio Kato

Match 2Q21 Earnings: Still Waiting on the Resurgence

We remain bullish on Match because inevitably, the pandemic will get under control…but the delta variant impacted the timing of Match’s inevitable...

Aaron Gabin

Match 1Q21 Earnings: Looking for an Opening

Match's EV/EBITDA is lower today (36x) then it was 6 months ago (42x) and we are 6 months closer to not just a normalization, but likely massive...

Aaron Gabin

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