Tuesday, March 2, 2021

Match Group’s Revenue Will Still Be Driven By Tinder

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Match Group Inc. (MTCH) is a Dallas, Texas-based technology company that owns a number of social networks that concentrate on people’s online dating. Tinder, which has 57 million monthly active users (MAU), is the company’s most recognized social network. Furthermore, the company owns online social dating networks such as Match, Hinge, OkCupid, Meetic, Pairs, Our Time, and PlentyOfFish. The corporation was formed by allocating 98% of the company’s income to the technology company InterActiveCorp in June 2020 from the selling of subscriptions and internal sales on social networks. In North America, the organization receives 51 percent of its sales, and in the rest of the world, 49 percent.

We estimate the potential number of worldwide (excluding China) users of online dating services at 254 million people. According to our figures, Match actually accounts for 41% of this segment (MAU 104 million), while the number of subscribers to the paying services of the organization is just 10% of all active customers, offering the opportunity to further turn users into subscribers.

We expect sales from the Match Group to grow from $2.1 billion to $4.9 billion by the end of 2026 (CAGR 13 percent), primarily due to the growth in social network revenue from Tinder, for which we predict an increase in paid services revenue from the existing $1.2 billion to $3.5 billion by the end of 2026 (CAGR 17 percent) due to an increase in paid subscriptions from 5.7 million to 14.3 million (CAGR 14 pp). We have predicted an improvement in operating profit, primarily due to a decrease in administrative costs, from 32 percent to 37 percent.

Despite the leading role in the online dating industry, we conclude that the shares of the Match Group Inc. (MTCH) are currently overvalued, so we placed an OVERVALUED rating on the investment horizon of 1 year with a target price of $119 (a possible decline of 21 percent).

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