The online dating industry has exploded in recent years, from websites to apps and beyond – digital romance is blooming, offering some promising investment opportunities. However, the market according to Goldman Sachs analyst Alexandra Steiger remains ‘underpenetrated’, and hence investors should be looking for longer-term growth in a landscape that is still largely emerging.
Currently, the market is dominated by a select few names. Bumble (NASDAQ: BMBL) and Match Group (NASDAQ: MTCH) are the fastest growing names – with Match Group also owning hugely popular Tindr amongst other names. Whilst competition is rife, Goldman Sachs analyst Alexandra Steiger argues for growth in both respective brands, bearing in mind that online dating still stands as an undersaturated market, and hence offers plenty more growth potential should both companies continue to attract new users.
Both Bumble and Match Group were upgraded to Buy from Neutral. Bumble has been issued a price target of $54, slightly down from $57; with Match Group issued a price target of $157 down from $162. Steiger refers to a ‘number of structural industry tailwinds’ that should benefit both companies in the years to come.
Following the bullish coverage, both stocks showed gains in early Thursday; but Bumble has lost 50% of stock value since its IPO, whereas Match Group – one of the original pioneers of online dating, has surged over 500% over the last five years. Obviously, Bumble is still a relatively new name to the market – but the company’s slowing user growth doesn’t bode well long-term sustainability; especially given the impressive repertoire of dating sites under Match Group.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.