Tinder Lights A Fire Under Match Group, Now Accounts For Half Of Paid Subscribers

Match Group Inc MTCH shares are rallying after the parent company of Tinder posted a second-quarter earnings and sales beat Tuesday.

Jefferies analyst Brent Thill maintained a Buy rating on Match with a $50 price target.

Even with Facebook, Inc. FB's proposed new dating feature still on investor's minds, Thill predicts the long-term impact on Match will be limited.

With a top margin profile and consistent double-digit revenue growth, the analyst views Match as one of the most compelling mid-cap internet stocks.

Tinder keeps growing. Revenue was up 136 percent year-over-year and subscriptions grew 81 percent. Tinder subscribers now account for nearly half of Match’s total paid subscribers at 3.8 million.
North American revenue growth has re-accelerated for four straight quarters. One in three dates now begin online, which is shaping up well for Match, but international remains an even bigger opportunity, with just 10 percent of global dates beginning online, Thill said. Tinder remains a top-ranked app in Australia, Canada, The Netherlands, Sweden and the U.K.
Match's 42-percent Q2 EBITDA margin is the highest in its history. Consistent margin expansion has been an ongoing story for Match, the analyst said.
Match is planning a significant marketing push for Hinge in the second half of 2018. The newly acquired dating site is differentiated from Tinder and recent field checks yielded positive feedback, Thill said.
Match has a new revenue feature in Tinder Picks. “We view picks as an incremental revenue driver and a away to attract potential Gold Subs. We like that it has both a subscription (must be a Gold member) and an a la carte (can purchase additional Picks) aspect,” the analyst said.

Match Group shares were up 16.87 percent at $45.45 at the time of publication Wednesday.

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Photo courtesy of Tinder.

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