Online dating has come a long way over the past decade and is helping more couples than ever find love in the digital age. What once was considered taboo and a passing fad has now become the most common way that people meet. Thanks to the number of mobile device users increasing regularly worldwide and the Internet reaching more places, the rise of online dating is likely just getting started.
While most online dating services did see a downtick in usage earlier in the year as a result of the pandemic, it seems that the leading online dating companies were more resilient than many initially thought. If you are a believer in the rise of online dating and you are interested in owning the best company in the industry, Match Group (NASDAQ:MTCH) is a stock worth considering. It’s the world’s leading online dating provider and could be a big winner in the coming years. Let’s take a look at a few compelling reasons why investors should love Match Group stock.
Diverse Provider of Online Dating Products
You have to hand it to Match Group, as they have an online dating product for every age and demographic. The company has a dating portfolio that includes 4 out of the top 5 online dating brands in North America and continues to make new acquisitions that are expanding its reach. With well-known brands like Tinder, Hinge, Match.com, and OkCupid, Match Group has established itself as the true leader in online dating and it will take a lot to dethrone the company.
Most of Match Group’s success has to do with Tinder, which is the #1 highest-grossing application in the world and the #1 most downloaded dating app in the world. Tinder generated a whopping $1.2 billion in revenue in 2019 and is clearly the company’s most valuable asset. User growth is still accelerating for the application which resulted in year-over-year Tinder Direct Revenue growth of 15% in Q2 driven by 18% Average Subscriber growth. The company’s management team has a strong history of growing successful apps, and Tinder should continue expanding globally over the next few years. Don’t forget about the company’s additional apps with growth potential such as Hinge and Pairs, as Non-Tinder brands grew Direct Revenue by 9% year-over-year in Q2.
Handling the Pandemic Well
While many companies were heavily impacted by the pandemic, Match Group was able to manage downside well which tells us that the company has a strong business model. Q2 earnings were impressive given the circumstances, as the company reported year-over-year revenue growth of 12% to $555 million. Adjusted EBIDTA also increased 13% year-over-year in Q2 and Average Subscribers increased by 11% year-over-year to 10.1 million.=
When you consider the ways that the pandemic has changed dating and prevented many people from meeting up, Q2 should intrigue investors. The truth is that Match Group’s applications are helping people to cope with the current crisis and connect with people in meaningful ways across the world. Match Group has handled the pandemic well thus far which could mean that it isn’t as vulnerable to the negative impacts of COVID-19 as many initially anticipated.
Profitable and Scalable Business with Room to Grow
Growth investors love businesses that are industry leaders and can continue scaling up in the coming years. That’s exactly the case with Match Group, as its total addressable market is massive. Many emerging market countries have yet to adopt the online dating trend while the singles population around the world is also expected to increase at a moderate rate through 2024.
There’s also the possibility that the company will continue improving its revenue streams from premium features and advertising. Match Group is reportedly working on a web mobile version of its enormously successful Tinder application which will not require app store downloads and could end up benefitting gross margins. Although there are risks related to competitors and the potential cannibalization of one brand by one of Match Group’s lower-priced options, it’s safe to say that Match Group has a chance to be a huge winner in the coming years.
Match Made in Heaven?
There’s a lot for investors to like about Match Group at this time. The company’s management team has a track record of growing and monetizing successful apps and has dealt with the pandemic well so far. With strong earnings growth and the potential for higher-margin online advertising revenue, this stock is a solid addition to any growth investors portfolio.
Companies Mentioned in This Article
Compare These Stocks Add These Stocks to My Watchlist
Top Ten Brokerages You Can Trust
There are more than 500 brokerages and research houses that hire analysts to issue ratings and recommendations. Collectively, these brokerages and their analysts publish approximately 175,000 ratings each year. Every trading day, there are nearly 700 reports and recommendations that are released to the public. To say that it’s difficult to separate the signal from the noise when interpreting this data would be an understatement.
MarketBeat has developed a system to track each brokerage and research house’s stock recommendations and score them based on their past performance. If Goldman Sachs predicted that Apple’s stock price was going to hit $150.00 on a specific date, how accurate were they? If Bank of America issued a “strong buy” rating on a stock, how did that stock perform compared to the broader market over the following twelve months. This tracking system has been applied to the 650,000+ ratings that MarketBeat has tracked during the last five years to identify which brokerages you can really trust (and which you can safely ignore).
This slide show lists the 10 brokerages who have issued the most accurate analyst recommendations over the past several years, as measured by the performance of their “buy” ratings and the accuracy of their price targets.
View the “Top Ten Brokerages You Can Trust”.