What's going on?
Investors swiped right on Match Group on Wednesday, sending the stock to a new all-time high before it settled at 8% up on the day – and it’s all thanks to Tinder!
What does this mean?
Match Group owns a variety of digital dating platforms including Tinder, Match.com and OkCupid. But its strong performance in the last quarter was largely due to its most (in)famous brand: the number of paying Tinder subscribers doubled in 2017 to 3 million as the app launched new subscription tiers like Tinder Gold. According to Match, Tinder was the second highest-grossing non-gaming app in the world in 2017 behind Netflix. Overall, the company’s revenue grew by 28% in the quarter, beating Wall Street’s expectations.
Why should I care?
For markets: Match has been a great investment.
Match became a publicly traded company in 2015 and last year narrowed its focus to digital dating by selling off test-prep company The Princeton Review. Its stock price has appreciated by double-digit percentages each year since it became a public company and has more than doubled over the past year. That’s a lot of dates!
The bigger picture: Paid models can pay off – but they’re not for everyone.
Match’s revenue growth last year was powered by new Tinder paid tiers, and it has more new features planned for 2018 (as well as the introduction of ads). Tinder will likely go down as an example of a successful “freemium” model. But the paid route also has its limitations: only so many people will pay for a dating app, whereas far more people will have a Facebook account or use Google’s search engine. Facebook and Google are therefore able to monetize the humongous amount of data they gather on their users and keep offering “free” services; smaller, niche consumer-facing apps tend to rely on user fees in the long run.