THE MOTLEY FOOL - Feb 18 - Match Group has seen its stock rise ~100% since its Dec 2019 spinoff from IAC. But as a part of that transaction, IAC transferred $1.7B of exchangeable notes onto Match Group's already debt-ridden balance sheet. Prior to the separation, Match already had ~$1.6B in long-term debt. At the time, Match was generating $620M in free cash flow a year, resulting in a 2.6x debt-to-free cash flow ratio. However, as a result of the spinoff, Match Group now sits with a long-term debt at $3.5B, or 4.7 times its current annual free cash flow. Fortunately for investors, 70% of this debt isn't due until 2027 and beyond, giving Match Group more than enough time to accumulate cash and pay it down early. If the industry continues to grow, as it looks like it will, and Match Group continues to achieve greater than 30% free cash flow margins, there is no reason why Match Group should have any difficulty paying down its debt.
by Ryan Henderson
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