Is Now The Time To Buy Stock In Bumble Or Match Group?

The online dating market is poised to double by 2025, leading an RBC Capital Markets analyst to turn bullish on Bumble Inc (NASDAQ: BMBL) and Match Group, Inc (NASDAQ: MTCH).

The Bumble & Match Group Analyst: Brad Erickson initiated the firm’s coverage on Bumble and Match Group with Outperform ratings, setting $65 and $190 price targets, respectively.

The Online Dating Industry Takeaways: “The online dating market is in the early innings of secular growth,” with 2025 TAM forecasted to be double current levels, said Erickson.

Growth is fueled by continued MAU growth and conversion to paid users, the analyst said.

The online dating industry is non-exclusive, meaning people can and do actively use multiple online dating sites/apps, according to the analyst note.

This non-exclusivity can mean multiple winners in the space, said Erickson. Both Bumble and Match Group are slated to benefit from these industry trends, Erickson explained.

Furthermore, pricing for the use of dating apps “with intent to marry” is inelastic, giving Bumble and certain Match Group brands hefty pricing power, the analyst said.

The Bumble Takeaways: Bumble is unique from other dating apps because of its female-centric approach, says Erickson.

This approach has led to a slightly older demographic of users, which likely explains why a higher percentage of Bumble users are paid subscribers relative to its competitor Tinder, Erickson said.

The female-centered approach has also driven more women to the platform, says Erickson. A third-party survey commissioned by Bumble estimates the platform “has 30% more women” than the average dating app.

The Match Group Takeaways: Match Group has a strong history of acquisitions, said Erickson.

The company is hitting all aspects of dating from hook-ups to final partners (think Tinder and Hinge) and corners both developed and developing markets, according to the analyst.

Match Group always keeps a keen eye on dating start-ups and is constantly looking to roll new companies that offer differentiated value propositions onto its online dating portfolio, Erickson said.

BMBL Price Action: Bumble shares were up 5.99% to $53.30 Friday.

MTCH Price Action: Match Group shares were up 2.77% to $162.63 Friday.