SEEKING ALPHA - Aug 7 - On May 1st, Facebook announced that it would be entering the online dating market. Prior to this date, Match stock increased 151% since early August driven by consistent user growth and increasing monetization. With the stock now 21% from its peak, does this present a buying opportunity, or the start of a bigger decline amidst heavy competition?
Facebook May See Some Success, but Not Likely to Slow Match Growth
- Facebook's demographics do not align with online dating.
- Its core audience is older, which doesn't align well with the younger crowd on Tinder.
- Users want to keep social media and dating separate.
- Facebook has historically struggled to disrupt other industries.
- Facebook's entry could actually further destigmatize online dating.
- Match, and Tinder still have numerous growth drivers. Match has ~7M paid members across their platforms, which is an estimated 10% of total members. Match Group is expect to launch a new feature in 2H18 that could drive further ARPU and subscriber growth.
Facebook's Success is a Risk to Consider
- Facebook has a huge user base and can invest significantly in the space if they choose to do so.
- Facebook could also roll out the feature to Instagram, which has a demographic more aligned with Tinder.
- People are already using Facebook and Instagram for dating purposes. A more explicit feature could see success.
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