Match Group Banks On Tinder To Lead It Into The Future

  • Thursday, July 13 2017 @ 08:18 am
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Match is one of the oldest names in the online dating industry, but its strongest asset is a much younger name in the biz: Tinder.

As the stigma around online dating fades, the industry is experiencing rapid growth, particularly in the Millennial segment. Pew Research estimates that use of online dating sites among young adults (ages 18-24) nearly tripled from 2013 to 2016, rising from 10 percent to 27 percent, and opening a major opportunity for Match Group to expand its market share.

Match owns Tinder, the leading dating app for Millennial singles. By placing the majority of its focus on growing Tinder, Match Group hopes to secure its position as the digital match-maker of future generations.

Match's portfolio contains over 45 different dating brands, including, OkCupid, PlentyOfFish, and Tinder. All four are major players in the industry, but only Tinder cracked the top 10 highest-grossing apps on iOS in April 2017 - just behind HBO NOW and ahead of Spotify and Hulu.

Founded in 2012, Tinder has quickly become the runaway leader in the US market. Tinder grew its PMC (Paying Member Count) 119 percent in 2016 to nearly 1.8 million people, and that growth shows no sign of stopping. The app is likely Match’s strongest hope of staying on top of a crowded and competitive market.

However, it’s not its only hope. Match Group’s growth strategy also includes incubating app startups. Hatch Labs, an incubator founded by Match and Xtreme Labs, launched in 2011. Swipe Ventures, led by former Tinder CEO Sean Rad, launched in December 2016. Both have the potential to give birth to the next generation of dating platforms, further securing Match’s premium position in the industry.

The stats are already impressive. Match has a market capitalization of $5.1 billion. Match's Q4 2016 dating revenue was $295 million, up 14 percent year over year. Operating income was $111 million, up 33 percent year over year. For the full year 2016, Match reported revenue of $1.22 billion, up 15 percent.

To maintain its marketshare dominance, suggests Seeking Alpha, Match Group should continue growing its existing platforms, while simultaneously investing in incubators to create the next generation of dating apps.

If the company plays its cards right, it can continue to build its highly profitable core business while paying down its debt, expanding its earnings multiple and making it an even more attractive prospect for investors.