Tinder is fueling Match Group’s growth. Subscription revenue at the mobile dating app is growing at a triple-digit rate and pushing the company’s stock to a new high. The successful model only highlights the shortcomings of Mark Zuckerberg’s wannabe status.
Serious business
The swiping app that became a watchword for hookup culture among millennials has grown up into a serious business. A recently introduced premium service, Tinder Gold, which allows users to pay various prices for extra features, has taken off like wildfire. Fifty percent of subscribers shell out for the package. The younger-skewing mobile app is also a nice hedge against the group’s flagship site Match.com, which attracts people in their 40s and 50s.
Match underscored those strengths on Wednesday when it said Tinder was on track to have more than $800 million in sales this year, double the revenue it had last year. All told it will represent nearly half of the group’s top line, which analysts reckon will reach $1.7 billion in 2018, according to Thomson Reuters I/B/E/S.
Shares in Match cratered back in May when Mr. Zuckerberg said his dorm-room creation was going to start a dating service for Facebook users. Turns out that was hasty. The stock jumped by more than a quarter in the two days after the company’s earnings call, to a record high of $49.28.
Meanwhile the $530 billion social network is mired in a host of thorny challenges about how it handles user data and how the platform can be easily manipulated. Facebook’s business model is predicated on culling sensitive data the more granular the better so brands can better target ads. The chances that might spook people looking for love is high.
Since its listing some three years ago after it was spun out from Barry Diller’s IAC (which still holds more than 80%), shares in Match have nearly quadrupled. Facebook’s stock has risen about 70% in the same period. Talk about swiping left.
(Jennifer Saba is a Reuters Breakingviews columnist. The opinions expressed are her own)