Goldman Sachs has classified Match Group as a ‘sell’ rating, and set a $45 price target for the firm. At the time of writing, Match stock sits at $55.68.
A note from the analysis says that Match Group’s long term prospects as a company are still strong, but it may be overvalued nonetheless.
Its current price is high relative to the growth rate. Match grows earnings at around 15% per annum, but the share price is close to 46 times earnings.
Growth may also be impacted by a high churn away from Tinder Gold services. Tinder has a weekly churn of 20% – low versus some of Match Group’s other properties, but still enough to raise concerns about retention.
The price already reflects the fact that Match Group is dominant in the online dating niche, the analysis says. An extra point to consider is whether this dominance may be exaggerated – the ever present threat of Facebook Dating and a Bumble IPO make the market less secure than is often discussed.
App Annie’s Paul Barnes, speaking to GDI in January, said: “We’ve seen Tinder maintain its ‘global consumer spend’ ranking of #1 for the past 3 years.
“This is due, in part, to its large user base and the willingness of those users to pay for additional features — reflective of the value they derive from the app.”
He noted, however, that: “Bumble is an example of an app that has grown in the rankings over the last 3 years, from outside the top 10 dating apps (by global consumer spend) in 2016 to #2 in 2018.”
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