Online dating has become a lucrative industry in recent years, thanks to the growing proliferation of several dating apps that target almost all sections of society. From being frowned upon, online dating has come a long way to gain universal acceptance, primarily led by millennials.
In fact, millennials make up the largest sector of online dating users. Almost 36% of people aged 18 to 29 have used an online dating service or app, per a survey by Pew Research Center. As of 2021, there are 30.4 million online dating users in the United States. This number is expected to grow to 35.4 million by 2027. The growing popularity of online dating apps is driven by the addition of search filters and criteria such as age and location to find potential matches. The addition of audio and videos has been a key catalyst as these features allow users to interact more with each other, thereby spending more time on the apps, driving top-line growth. Increasing privacy and data protection features through the usage of blockchain technology is helping in improving the acceptability of dating apps. These factors are expected to help the online dating industry reach $3.920 billion in revenues in 2022, per estimates from Statista. The industry is expected to witness revenue CAGR of 6.56% between 2022 and 2025. Image Source: Zacks Investment Research
Here we discuss two stocks that are well-poised to benefit from this trend:
Match Group ( MTCH Quick Quote MTCH - Free Report) is considered to have pioneered the concept of online dating. The company has been benefiting from increasing subscriber addition. Match is benefiting from increasing activity and engagement seen across its apps like Tinder, Hinge, Meetic, Pairs and OkCupid since the COVID-19 outbreak, especially across western markets. This Zacks Rank #3 (Hold) company is seeing a rebound in the propensity to pay, driven by robust uptake of video-enabled services to boost engagement amid the COVID-19 crisis. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tinder, the world’s #1 downloaded and top-earning dating app, is benefiting from gender diversification as the app includes more gender options like transgender. Match Group has introduced Tinder Lite to expand its international presence.
Adding new features in Tinder like “Swipe Night,” a live, interactive dating feature where singles follow a storyline together, is expected to keep the traffic momentum intact. The Zacks Consensus Estimate for its 2022 earnings is pegged at $2.48 per share. Revenues are estimated at $3.61 billion, indicating 20.4% growth from the estimated 2021 figure. Bumble ( BMBL Quick Quote BMBL - Free Report) operates two apps in the online dating market -- Bumble and Badoo. These allow users to create profiles, swipe to match with other users and form connections. The Bumble App is built on principles of female empowerment, with the unique feature that women must “make the first move” to initiate conversations on the app. Bumble is riding on its women-oriented features that have gained strong traction among its users. Features like “Night In” let users set up a virtual trivia date if they match someone. This has been helping the company expand its user base. Bumble is expected to benefit from its growing brand value and revenue-generating opportunities. Bumble also carries a Zacks Rank #3. The Zacks Consensus Estimate for its 2022 earnings is pegged at $1.90 per share, up 17.3% over the past 60 days. Revenues are estimated at $950 million, indicating 23.6% growth from the estimated 2021 figure.