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Can Facebook Dating Push FB Stock Higher?

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On Sep 5, Facebook Inc. introduced its dating service — Facebook Dating — in the U.S. online dating market. It is aimed to serve single users looking for potential partners.

The dating feature could not only boost the social media giant’s popularity but also prove to be a tough competitor for other companies offering similar services.

Facebook Dating’s mode of operation is particularly interesting and reveals the social media giant’s clever marketing strategy to push the feature into the limelight instantly. The dating feature doesn’t need any additional downloads and is available on the main Facebook mobile app, thus uniquely tapping into its existing pool of users.

Users can create their dating profile using information from Facebook and Instagram. The feature won’t match users with their friends or any accounts they may have blocked.

However, there are inclusive features in Facebook Dating such as Secret Crush, which allows users to list up to nine Facebook friends or Instagram followers they have a crush on, and will be notified if any of those listed contacts do the same. All dating activity is private.

Facebook’s entry into the $2.5 billion U.S. online dating market is undoubtedly ambitious. The feature was first introduced in 2018, and has been tested in 19 countries (minus the United States) where it garnered impressive response. But the United States is a crucial market for the social media giant, given that its competitor Match Group Inc. (MTCH - Free Report) generated a little more than half of its 2018 revenues from the country.

How Does Facebook Dating Fare Against Match Group Dating Apps?

Shares of Match Group, which operates major dating services globally such as Tinder, Match and OkCupid, lost as much as 4.6% on Sep 5 post Facebook’s announcement. Match Group currently has a Zacks Rank #3 (Hold).

Nonetheless, Facebook’s dating feature could pose steep competition to Match Group’s services because of two major reasons. First, going by numbers, Facebook wins the game for holding more number of monthly active users (2.41 billion as of Q2 2019) while Match Group’s popular dating application Tinder had 5.2 million average subscribers as of the quarter ended June 2019.  

Thus, Facebook Dating will bank on its existing user base instead of building it from scratch. Second, its mode of operation stands out, thanks to its interesting inclusive options.

Therefore, Facebook Dating could emerge as a winner and will have a positive impact on the company’s share price movement.

Facebook too carries a Zacks Rank #3. The company’s stock price has already outperformed the Zacks Internet – Services industry on a year-to-date basis (+45.7% vs. +1.1%). The Zacks Consensus Estimate for its current-year earnings has risen 1.4% over the past 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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