Contributed by: kellyseal Monday, October 15 2018 @ 09:22 am
The online dating market is hot right now and projected to grow to $12 billion by 2020. This is in part thanks to bullish analysts targeting a price point of $66 for Match Group stock, based mostly on the incredible revenue growth of Tinder.
This projection by Nomura Instinet came on the heels of a downward market in early October. Match Group stock was projected to be 28% higher than what it was worth on Thursday October 11th before the announcement. The $66 valuation gave Match Group a bump on Friday.
Facebook’s entry into the online dating market could have an effect on these projections, though Nomura Instinet analysts say the valuation is based on Match Group’s effective strategy of buying competitors before they scale. Most particularly, Match Group was very successful in its purchase of dating app darling Tinder, which has seen unexpected revenue growth since launching its paid premium service Tinder Gold.
According to Mark Kelley[*1] , an analyst with the firm, the valuation is dependent on peoples’ willingness to try online dating, which has seen a spike in recent years thanks to dating apps like Tinder. "Roughly half of internet users are single, and we estimate 20% of them will be willing to use online dating products by 2020 (up from 15% in 2015), which equates to ~310 million people globally (excluding China)," Kelly said in a note to clients.
He added: “We believe that Match will remain the clear leader in dating for the foreseeable future, as Tinder growth continues, other brands continue to evolve, and as Hinge reaches scale."
Match Group has acquired apps that are growing in numbers (including dating app Hinge) as a strategy to corner the market, which is notable in light of new competition from Facebook.
“As far as other competition is concerned, we expect Match to continue acquiring assets it views as either a threat or additive to its already well-run brands," Kelley wrote.
This projection also comes on the heels of separate lawsuits targeting the business practices of Match Group, brought by ex-Tinder employees and dating app Bumble. The Tinder employees allege that Match Group undervalued their company and its potential revenue growth, forcing them to sell their options early at a significant loss, which Match Group has denied. Bumble sued Match Group after its acquisition negotiations broke down, claiming that Match Group only wanted to steal proprietary information about Bumble’s technology and business dealings. Match Group also denied this claim.