Match Group Buys 51% Stake in Hinge, Ups Ante in Dating Space
Match Group Inc. MTCH announced that it has acquired a 51% stake in Hinge, the NY-based “relationship” app, in the past week. The company retains the right to buy the remaining shares within the upcoming 12 months. The financial terms of the deal have been kept under wraps.
Hinge had witnessed a whopping surge of 400% in user base in 2017 after Match aided the site to revamp dating, doing away with the “right swipe” option for meaningful real relationships. Buoyed by user growth, the Tinder provider has been increasing its stake in Hinge since then.
“Hinge’s passion for the user experience and their innovative approach to dating has created a product that is highly relevant particularly among urban, educated millennial women looking for relationships,” said Mandy Ginsberg, CEO of Match Group.
The company remains elated and is looking forward to become a notable contender in the relationship arena. Notably, the shares of Match Group have soared 139.4% in a year, outperforming the industry’s rally of 9%.
Expanding Footprint into Relationship Space
Given the essential difference between “casual dating and hook-ups” and “meaningful relationship”, we believe this move will enable the company to explore a new relationship space. The addition to the portfolio bodes well, since it provides the users with increased options. The millennial individuals looking for a purposeful relationship can find solace in the company’s new offering.
Notably, Hinge has already created a solid customer base within seven years of its operations. Per App Annie estimates as revealed by a source, “Hinge is the fifth-highest grossing dating iPhone app”. These attributes make Hinge a lucrative acquisition target.
The new acquisition bodes well. Reportedly, the company believes focus on high end millennial individuals undermines the potential competition threat from Facebook’s FB dating developments.
Match Group is considered to have pioneered the concept of online dating, which is why it enjoys a first mover’s advantage in this market. Match Group has been benefiting from increasing subscriber addition in the form of membership subscriptions. Its average paid subscribers surged 26% to 7.4 million in the first quarter, driven primarily by strength in both North America (up 17% year over year) and international (up 37% year over year).
During the first quarter, Tinder average subscribers increased 87% year over year and came in at 3.5 million. Average subscribers grew 368,000 sequentially and 1.6 million year over year. This momentum bodes well for top-line growth, going forward.
Zacks Rank & Other Stocks to Consider
Match Group carries a Zacks Rank #2 (Buy).
A couple of top-ranked stocks in the broader technology sector include Seagate STX and NVIDIA Corporation NVDA, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seagate and NVIDIA have a long-term expected EPS growth rate of approximately 18.9% and 10.3%, respectively.
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