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Match: 7 Reasons To Buy Now

Mar. 02, 2020 2:24 AM ETMatch Group, Inc. (MTCH)29 Comments


  • Match's stock price has fallen 25% over the last month.
  • The stock is cheap now if you look at the growth of the company.
  • Match has several levers to pull: international growth, more monetization and new products.
  • In Q2, Match will become independent from IAC and that will probably boost the share price because it will be included in the S&P 500 and big funds can buy then.
  • I do much more than just articles at Potential Multibaggers: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »


The coronavirus, or COVID-19, is spreading around the world, not just physically, but also mentally. The stock market has caught a flu too, with the market in correction status right now. Some stocks can take advantage of the coronavirus. Zoom (ZM), for example, is an obvious company that benefits from the virus. Other companies are hit extra hard. Match Group (NASDAQ:MTCH) is in that last category. This is how its price has done over the last month:

Now is the time to take advantage of this fall and accumulate shares in Match. In this article, I will give you 7 reasons why.

An introduction to the company

Most of you will know Tinder, the most important product of Match. You can see how important it is for the company in this graph:

Match Group Q4 2019 earnings Tinder revenue

(Source: Company presentation)

All other Match brands are more or less stable, not growing and not going down too much. But Tinder lifts the total number of paying subscribers, producing 19% YoY growth. Of the total revenue in 2019 of $2B, Tinder brought in $1.15 billion. Despite its size, Tinder's revenue still grew by an impressive 43% from 2018 to 2019.

Match Group Q4 2019 earnings Tinder revenue

(Source: Company presentation)

The number of paying subscribers keeps rising too:

Match Group Q4 2019 earnings Tinder revenue

(Source: Company presentation)

Tinder has already been downloaded more than 350 million times, crushing all competition:

Match Group Q4 2019 earnings Tinder revenue

(Source: Company presentation)

But Match Group does much more than just Tinder. It has built out a real empire of online dating services:

Match Group Q4 2019 earnings Tinder revenue

(Source: Company presentation)

Reason #1: International Opportunity

While the adoption of Tinder and other online dating apps has become more and more widespread in the US and Western Europe, there is still a lot of market share to take in the rest of the world.

Tinder and the other apps Match owns don't

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This article was written by

From Growth to Value profile picture

From Growth To Value is an individual investor with a long-term perspective. He targets high-quality disruptive businesses who have early multibagger potential. His rigorous research process provides him and his readers conviction in these companies.

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Analyst’s Disclosure: I am/we are long MTCH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (29)

Moat Investing profile picture
Nice analysis. This video has the same thesis but with focus more on valuation https://youtu.be/pxrTwshs8hQ
ayv profile picture
06 Mar. 2020
One of my reasons in buying match in 2017 is still intact, and I keep seeing it more and more; Younger generations buried on their mobile phones. 🤣😂

And the top dog in online dating 👉🏼 $MTCH
Maybe MTCH is a good short-term opportunity, but it is hard to justify holding in the long-term because of key faults in the long-run business model.

1) Imbalanced Male/Female ratio will always make the product suboptimal.
2) 30-40% of members are not ever going to pay for the product (women)
3) Another 10-20% are never going to pay for the product (highly desirable men)
4) Out of the remain 40-60%, I assume AT LEAST 1/2 will never pay for it and just use a bunch of different dating apps, take their swipes, and reset daily.
5) Of the remaining 20-30% that may pay for it, it will only be for a limited period of time. (Until they find a match or enough matches they like OR they realize that paying to double their baseline chance of finding date(s) is meaningless when the baseline rate is <1% for most users willing to pay)
6) The demand for a product is driven by how good it is. The best dating app would quickly match you with a compatible person. However, this defeats the purpose of dating app as a business because an "app that's meant to be deleted" is not an app that can generate long-term revenues from its customers.
7) Dating apps only reach strongly a very small demographic (18-35, in urban environments)
8) Outside markets are not going to be easily penetrated, at all. The American sexual revolution took place in the 60-70s!!! And it took up until the mid 2000s for the hook-up culture to really take-off. The biggest markets (China and India) are nowhere near that cultural transformation and the demographics do not support such a culture (skewed male-female ratio already). As for Non-UK-Europe and Latin America also aren't big on the apps because their culture inherently is more open to random meetings and in-person flirting...much more than the more individualized/anti-social economies of the US/UK.
From Growth to Value profile picture
Hi @Johnathan21212
Thanks for reading and commenting. Here are my remarks about your comments.
1 to 4: it's surely true that there will always be a substantial part that doesn't want to pay... that much. I think if you enter a low-cost price (something like $1.99 per month) with the guarantee that the product is really good, you have a different market, I think.
5+6 This is inherently true, of course, but the model has already proven that it works.
7. 'Dating apps only reach strongly a very small demographic (18-35, in urban environments)'. That's true... for now. I just see this as a huge opportunity left. People who have used an app before and whose relationship ends will use it again if they're older. Don't forget that about 1 in 2 marriages fails. In relations, that number is even much higher.
8. I don't see this as part of the sexual revolution alone. Tinder probably is, but the other apps give solutions for people who are spending more and more time online, getting out of their house less and less. That problem is also there in urban areas in India and China. If not, Momo and TanTan wouldn't exist in China.
As for Europe ex-UK, I really don't know where you get that. I am based in mainland Europe and 4 out of the 5 singles of my age (I'm 43) use Tinder and there is not even a taboo anymore about it. If there's a single, his or her whole environment encourages that person to get on Tinder.
GLTU and keep growing!
Thanks for reply. Will take your investment thoughts into consideration.
The assumption of debt and levering up to provide the cash distribution to IAC changes the capital structure and EPS/FCF profile of MTCH quite a bit. I agree there are benefits to the spinout, eg. Index inclusion down the road, but a spinout also creates the risk of a selldown by IAC investors who get small chunks of MTCH. Could be an interesting longer term play post spin and COVID issues.
Keep adding on the dip
Added a few shares. Thanks for the article!
i like the article and i agree with your points. the words "genetic matching" make me real nervous though, that's some dystopian future stuff right there
From Growth to Value profile picture
I think it will be a choice for some people. Suppose you have a genetic defect and you know that if that genetic defect is also in your partner, you can never have children or healthy children. I think you'd like to know then. Every new technology can be used in a dangerous way but it can do a lot of good at the same time.
GLTU and keep growing!
Good article, but you failed to mention some other risks, like ongoing FTC investigation or CEO departure
From Growth to Value profile picture
Thanks for reading and commenting.
As for the CEO switch: I see that as a consequence of the IAC split-off. The subscribers of Potential Multibaggers got my full thoughts in more detail but in short, I don't worry about it.
As for the FTC investigation, I don't see it as substantial to the long-term case for Match. There will certainly be fake accounts. But is Match responsible for these? Even if it would be, there would be some sort of fine and that would be it.
GLTU and keep growing!
Fake accounts affect user optics with respect to MTCH products. The FTC investigation might be a pretty big deal in the long run.
Read between the lines. The FTC lawsuit, as they previously claimed found no civil charges but was referred to the DOJ because there was criminal intent.
Fake accounts are one thing but there's a correlation to their revenue and growth curve based on how active the bots where. Once the bot activity declined on their end, so did the total active users and revenue.
Match is a good example for the network effect moat.. accumulate...
From Growth to Value profile picture
Correct: the more people use it, the more people will have benefits and the more new people will use it.
GLTU and keep growing!
WP89 profile picture
02 Mar. 2020
But people also use a lot of different options.
Well if you use Facebook you also use probably Twitter, Instagram and WhatsApp.
They do not close each other away.
Network effect is strong but also weak because a competitor can offer better/different product and people move to it if there is enough demand for it.
Network effect works only if you know how to use it.
Google vs Match
Which one them use Network effect better?
I say that google has a stronger moat in use.
You can beat others on the search engine but not online dating services because it is not have so strong Network effect because you can always switch to another.

Google moat: More people use it the more accurate is the results it gives + other services it can offer.

Match Moat: More people use it the more value it provides.

I believe that Google have one of the strongest moat that you can have.

At least at this moment...

Winners keep winning!
marc1077 profile picture
nice article:)
From Growth to Value profile picture
GLTU and keep growing!
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