Tinder Or Facebook: Analysts Weigh In On Who's More Attractive

With a new stud on the Street, Match Group Inc MTCH is looking less attractive these days.

Facebook Inc. FB announced Tuesday its foray into online dating with new features to help connect its 200 million “single” users.

The virile competitor catalyzed a 25-percent slide in Match’s value.

Facebook’s Advantage

Match’s bull thesis has long depended on its unique scale, and Facebook is positioned to impose previously unseen competition through its significantly larger built-in network and its data access.

“We believe a sizable portion of the online dating ecosystem (including Match.com and Tinder) leverages the Facebook sign-in API and Facebook has the right to use the data (per the developer terms of service), giving it a significant jumpstart in building a dating platform,” Oppenheimer analysts Jason Helfstein and Alec Brondolo wrote in a note.

They anticipate additional risk to Match.com’s paid-member count or margins as Facebook’s free, convenient, competitive platform drives an increase in customer acquisition costs.

Jefferies expects no effect on short-term financial results but noted potential long-term threat to market share.

“Ultimately we don't believe the impact will be catastrophic, but the increased uncertainty around FB's offering (timing, geo rollout, layout) creates a tough setup for MTCH near term,” analysts Brent Thill and Brian Fitzgerald wrote in a note.

It Won’t Be That Bad

Nonetheless, Jefferies considers the market big enough for both players, considering the average online dater uses three apps. By its assessment, Match can provide a premium offering complemented by Facebook’s more casual service.

Bank of America agreed that Match “can continue to thrive” given the non-exclusive nature of the market, Facebook’s potentially discouraging privacy issues, and the fact that Match has long survived Facebook’s organic and informal facilitation of online dating.

“Match Group has been leading the proliferation of online dating for over two decades (Match.com launched in 1995) and more recently has been growing Tinder at rapid rates,” analysts Nat Schindler and Jennifer Noesen wrote in a note.

Facebook should also have little impact on Match’s leading Tinder app considering its differentiated use case — “relationship-seeking versus hooking up,” Oppenheimer wrote.

Where Match Now Ranks

Bank of America lowered its price target from $54 to $45 to account for competitive pressures but maintained a Buy rating on the stock.

Anticipating headline risk, Jefferies downgraded the stock to Hold, cut its price target from $50 to $40, and sliced 2019 year-over-year revenue growth estimates from 16 percent to 12 percent.

“We remain big fundamental fans of the business and believe in the long-term opportunity, but there is a massive element of unknown right now that makes it difficult for the stock to work near term,” the analysts wrote.

Where IAC Stands In All This

Facebook’s play in online dating also lessened the appeal of IAC/InterActiveCorp IAC. Jefferies lowered its price target from $190 to $165 while maintaining a Buy rating on the stock.

“Our thoughts around IAC's other business units remain unchanged, and we note that after today's move IAC still trades at a more than $3 billion discount to its ownership in MTCH and ANGI,” Thill and Fitzgerald wrote.

They consider Vimeo IAC’s most promising growth asset valued around $700 million, and they expect 17-percent revenue growth in an undervalued publishing business.

Related Links:

UBS Revises Outlook On IAC, Parent Company Of Match And Angi Homeservices

Match Group Is a Global Online Dating Leader, But Shares Are Fairly Valued, JPMorgan Says