Match Group stock has more than doubled over the past year following the rollout of Tinder Gold, but one Seeking Alpha analyst feels that holders should consider taking profits now.
The group is becoming too reliant on Tinder, it is argued, and the resultant increase in the importance of mobile (i.e. in-app transaction costs) will be a serious burden on cash flow in the future.
In all mobile transactions, 30% of sales must go to either Google or Apple.
Tinder subscribers now make up close to 40% of Match Group’s total subscribers. At the current rate, this will change to over 50% by 2020.
As well as fighting high purchase fees, the dominance of one product will make Match Group into a ‘one trick pony’, the analyst feels, much like GoPro or Fitbit.
These technologies have caused “shareholders to lose tremendous amounts of money since their respective IPOs.”
The combination of the mobile trend and an overreliance on Tinder could make Match a “victim of its own success”. A diversified Match Group is said to be preferable as an investment.
Google and Apple might be the main beneficiaries of Tinder’s success, and so these stocks would be better to buy when considering dating trends.
The analyst differs from recent commentators, many of whom have argued that a ‘network effect’ makes Match a safe bet.
The more users are active on a dating site, the better the experience of new users will be. Tinder will benefit exponentially from having the biggest user base, therefore.
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