3 Reasons Investors Should Swipe Right On Match Group Stock

Dating company Match Group is still number one in the dating world, but there is a new competitor in the form of Facebook.

We are living in an era where many people are turning to digital dating services in hope of finding their perfect match or making new friends. Match Group (NASDAQ: MTCH) is leading the way with online matchmaking, owning products such as Tinder, Hinge, Plenty of Fish, and OkCupid. 

Here are the reasons we still like Match Group:

1. Its Revenue Is Growing

In its most recent earnings report, Match Group’s total revenue exceeded $2 billion for the first time, up from $1.7 billion the year before. As for the breadwinner, Tinder topped $1.1 billion, driving huge growth for the business.

The apps generate profit from charging the users a subscription fee for services or a membership fee. Additionally, they make money from advertising and non-dating revenue

Tinder’s total subscribers jumped by 39%, to 5.7 million for 2019, and average revenue per user for the platform increased by 9%. Other apps that the company holds like Plenty of Fish and OkCupid help make up the Match Groups total subscribers’, which also increased by 19% to 9.6 million.

2. It Beats The Competition

While Match is still the biggest dating company, it is facing mounting pressure from competitors including Bumble and Facebook (NASDAQ: FB).

Facebook only launched its dating platform in September and is linked to the users’ account as a separate tab on their mobile device. Since the company has access to billions of people’s information, it promises to connect singles according to their shared interests, events, and groups. Facebook’s dating platform has launched in 20 countries including the United States, Canada, and the Philippines. So farMatch Group’s shares fell more than 15% on the day the social media company announced its dating feature. 

However, the big social media network has become involved in a number of data breaches and questionable privacy moves in recent years and is something that could turn users away from using Facebook’s dating app. On top of this Match Group generates 98% of its top line from “direct revenue,” while Facebook gets the majority of its revenue from targeted ads, thus the need for personal data. 

Blackstone Group (NYSE: BX) recently purchased a majority stake in popular dating app Bumble, which is one of Match Group’s biggest rivals. While the recent acquisition worth $3 billion could mean a boost in efforts to compete with Match Group, for comparison Match is worth about $18 billion. 

3. International Growth

The future looks bright for the online dating giant which is focusing on the localization of the products overseas and promoting its other brands. At the recent earnings call, the company said going into 2020, there has been growth in areas apart from Tinder, with other apps like Hinge and OkCupid becoming more popular across Japan and Europe. For instance, OkCupid posted huge growth in markets including India and North America. The dating platform posted a 10% year-over-year growth for eight consecutive quarters while Meetic recorded a six-year high in subscribers following a marketing campaign. 

It was revealed in December 2019, that IAC/InterActiveCorp (NASDAQ: IAC) would spin off its shares of Match Group. Following the news, Match Group shares rose by 5%. The media company owns 80% of Match and is well known for successfully spinning off businesses into separate companies, including Expedia (NASDAQ: EXPE) and Ticketmaster. This is expected to be finalized early this year.

Despite the increasing competition in the online dating landscape, Match Group is managing to keep up with users needs and trends – I would swipe right on Match Group’s stock.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Match Group. Read our full disclosure policy here.