The Post-Pandemic Outlook for Match Group Stock By TipRanks
Match Group Inc . (NASDAQ): The market leader in the online dating sector, NASDAQ has more than 45 dating sites, such as Tinder, Hinge and Match.com.
The company’s total revenue is 95% from subscription fees, while advertising makes up 5%.
While there may be some problems ahead of Match Group, I think the company is in a strong position to survive the post-pandemic era. Therefore, I continue to believe that Match Group has the potential for great success. (See MTCH stock charts on TipRanks)
Demographic trends are in favor of the dating industry, as the success of this industry depends on the singles population around the world.
The U.S. Census Bureau reports that nearly half of all Americans are unmarried or single today.
Even in pre-pandemic times, when world marriage rates declined, single living was gaining popularity all over the globe, there has been an upward trend.
Because of restrictions on mobility, which have limited global population movements, online dating became more popular in recent months. The post-pandemic boom is expected to make this an attractive industry due to increasing singles.
Match Group has two strong reasons for believing that this industry outlook will translate into greater profits.
The company’s market leadership. Match Group is the owner of four brands that are amongst the most popular in North America. They each serve a specific purpose in different markets, depending on their location and culture.
Each of its products has seen the company gain market share, which will likely be an important catalyst for growth during the next pandemic.
Tinder’s market leadership position has been maintained by tripling the number of its users over the past five years. It has remained unaffected the No. Tinder Plus, which limits the number of free features, is the most downloaded dating app.
Tinder is primarily used by young men looking to have casual relationships. Tinder paid users have grown from 0.3 million to 6.2 millions in just two years, largely due to low-priced apps that are appealing to them.
Match.com on the other hand, is primarily used for mature users seeking long-term relationships. The company therefore adjusted its pricing.
Match Group also has been cautious in diversifying and customizing its product portfolio, including Meetic and BlackPeopleMeet (for those over 50).
The possibility of major international expansion. Over the last few years, there has been a remarkable increase in subscribers from outside the U.S. and the company continues to expand its global footprint through strategically planned acquisitions like the purchase of Hyperconnect (a South Korean dating site giant).
First, Match Group’s financial performance depends on attracting relationship seekers, and this has a direct effect on operating leverage due to marketing costs of attracting new users. Match Group may have to invest aggressively in marketing in order to keep its top leadership. This could impact operating margins.
Hppn allows users find other people they have met before. Hinge allows users anonymously to rate their date based on previous experiences. Tinder and Hinge are considered less secure and accountable than competitors like Hppn.
A third risk is that a user may be active on multiple dating platforms because there are no switching fees. This could pose a threat to Match Group as another competitor could eventually create a similar network to Match Group.
Wall Street’s Take
Based on the ratings of seven Wall Street analysts offering 12-month price targets for Match Group, the stock comes in as a Moderate Buy, with five Buys, and two Holds.
The average MTCH target price is $174.86 per share. This implies an upside potential for 11.7% compared with the current market price.
Match Group will face stiff competition in the post-pandemic era, but the company is still in a good position to deliver attractive returns to long-term investors because of its scale, and first-mover advantages in key markets.
Dilantha De Silva didn’t hold any position at the publication of this article.
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