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Match Group (MTCH) Stock | NASDAQ: MTCH

Covered by Stratosphere

Finding Growth in Dating

Match Group ("Match") is a provider of online dating products. The firm went public in 2015 when it was more than 80% owned by IAC/InterActiveCorp until IAC spun it off in the second quarter of 2020.

The company has a vast portfolio of online dating services and apps, including Tinder,, OkCupid, PlentyOfFish, and Meetic.

Match has more than 45 brands of online dating sites and / or apps, from which it generates fees from users. The company also generates a small portion of revenues from advertising.

Stratosphere Score












Balance Sheet


Investment Thesis

  1. Match is a holding company of online dating platforms, managing 25 different applications, with the biggest one being Tinder. Today, Tinder is the top grossing mobile app worldwide across all categories in the app store.

    Match runs a "freemium" model under which applications are free to use when starting out. To unlock premium features, users need to be on a paid plan. Around 95% of revenue is drive through premium subscriptions.

  2. Match's competitive advantage lies in its sheer market presence and network effects in its diverse portfolio of platforms catered to specific niches that people look for in relationships.

  3. Its main risks lie in lack of switching costs and low lifetime value as users have no incentive to stay on one app, having the ability to switch whenever, while also having a short lifespan as finding a lifelong match means the app has no future use.

  4. As online dating adoption increases, singles are making the switch to dating applications compared to traditional in person methods. Online dating is expected to grow by more than 40% by 2024.

  5. A growing number of users on dating apps not only help the company scale, but also help other users as these network effects give singles a better experience when looking for a match.

Key Company Metrics

A set of metrics we constantly keep updated to monitor the investment thesis.

Competitive Advantages

Market Dominance

Of the 7 largest dating platforms by user base, Match Group owns 4 of them. 

What's more is these are only Match's most popular platforms. This list does not include the unserved and underserved niches that Match tries to target with its vast platform portfolio targeting specific regions, religious communities, and demographics.

Match's vast reach and appealing dating platforms make it the most popular and reputable collection of dating platforms. This keeps current users on the platform and attracts new users due to the strong brand name the company maintains.

Network Effects

Match's collection of dating platforms, some of which are among the most popular apps in the world, attracts millions of individuals each year. The key to a dating platform's success is having dating / relationship options for users.

Being the most popular dating platform comes with a major advantage that smaller platforms will not be able to "outcompete" on - millions of users, meaning millions of potential matches / dating options.

Match's wide reach is, therefore, its largest advantage. Because many new and existing users continually turn to Match for its dating platforms, the network effects will continue to provide the greatest value for users. In many ways, this is similar to social media. The more people around you that use it, the more likely you will sign up for that social media service too.

Opportunities Ahead

  • The "rise of online dating" is a major secular trend that is following in the footsteps of other major technological trends this decade. Through dating apps' creative user interfaces and positive user experiences, these platforms have become the go-to for finding a new partner. In 2020, the dating app industry generated $3.1 billion with nearly 200 million active users. We believe online dating is here to stay with Match being the clear winner that will hold major market share in the industry.

  • Tinder took the dating app market by storm by fostering a cohesive user experience. It introduced the idea of "swiping", which is now considered the gold standard. If a user likes someone's profile, they could swipe right to accept or left to reject. Using this platform, users can swiftly sift through hundreds of profiles each day. The ease of going through so many profiles is, in many ways, addicting. The numbers prove this. On average, Tinder users log in 11 times a day, spending 7-9 minutes per session, for a total of 90 minutes per day. This sticky platform is what has created the online dating industry to skyrocket. It goes without saying that Tinder was likely the most important platform in normalizing online dating. Match will continue to win the market.

  • Match has been able to grow through acquisitions. A great example is Match's purchase of Hinge. Running an already successful company, Match took its proven strategies with Tinder and Plenty of Fish and applied them to Hinge to help bolster their already-staggering growth. Match improved the marketing of the app, offering it as a counterpart to Tinder, as most people see Tinder as a casual relationship app, while Hinge is catered more towards serious long-term relationships. It goes without saying that Hinge is extremely popular today.


Switching Costs

One concern with Match Group is there being little to no switching costs involved with any of the apps. A consumer can easily switch between Tinder to a non-Match Group competitor, such as Bumble, without losing out on any major features.

Despite that, the company does have high engagement rates. Tinder has a creative user experience that is addicting and can keep users on the platform for a long period of time. This helps to build stronger brand awareness and increased conversion rates as more time spent on the platform translates into more subscriptions.

A Lack of LTV (Lifetime Value)

For most apps, companies strive to keep churn low. The goal is to keep consumers on the platform to generate more money.

For dating apps on the other hand, having high churn is a sign that the business model works. If two people connect with each other and get together, they have no more need for the app going forward. This poses the risk of a short lifetime value (LTV).

Hence, the Hinge slogan, Designed to be Deleted.

The incentives for success are not aligned between the business and its user base.

However, we think there will always be a steady user base available for Match products. For one, most people date multiple times throughout their lives. Second, there will always be young adults that enter the dating scene while others in their 20s and 30s find a match, get married, and move on from dating apps. Lastly, and unfortunately, many marriages fail. Many divorced couples tend to start dating again after some time, and Match products are a way to get back into the dating scene.

Facebook Dating

Facebook Dating was a new service that Facebook introduced at the end of 2019.

This poses a risk to Match as a massive competitor due to the network effects and optionality that Facebook carries with its brand. Facebook has nearly 3 billion monthly active users on its platform. Introducing a new feature allows the company to translate its pre-existing customers. The brand power and user base that Facebook carries can pose a huge threat to Match.

Investors should be paying attention to how Match positions its different platforms while also looking at market share.

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