A Seeking Alpha analyst has detailed Match Group’s position in the online market, focusing on its dominance in North America and its forays into APAC.
Network effects are singled out as a contributing factor to the firm’s success – the more users a dating app has, the more valuable the product may be to consumers. This presents a significant barrier to entry for startups, which need to acquire thousands of users to offer a comparable experience.
Another factor is that the swipe-based interface pioneered by Tinder is now reasonably ubiquitous. There is little reason to switch from this app to another, given the size of its user base and the negligible UX differences from competitor to competitor.
The article reads: “Tinder is basically industry standard at this point, making any improvements to this UI marginal at best.”
Further to this, Tinder can attack new competitors by introducing add-ons to its pre-populated app. The Seeking Alpha piece describes “Top Picks” as being similar to Coffee Meets Bagel, and India-specific “My Move” as similar to Bumble.
Turning to the potential growth in Asia, the analysis describes the massive potential in populous countries like China and Japan.
Prevalent conservative attitudes can be both a help and a hindrance to Match Group in such geographies, as taboos around flirting in public may push people to use online services instead.
The author writes: “The current statistics of singles who have never used an online dating product in Asia shows massive market potential.
“The singles population sizes in international markets alone (especially in Asia) means that even if Match never achieves the same market penetration in these markets, vis-à-vis North America, it would still represent a tremendous increase in revenue.”
Much of the optimism surrounding Tinder’s umbrella is priced in to the stock already, and the article concludes that it’s one to watch rather than a strong and urgent buy. The value is currently $55.66, with an attendant market cap of $15.48 billion.
Read more here.