Wall Street Is Falling For Match Stock

Match Group Inc (Nasdaq: MTCH) stock jumped more than 17 percent on Wednesday after the online dating giant’s second-quarter earnings beat and guidance raise. Analysts say Tinder is leading a resurgence in North American growth for Match, and investors have little to fear from a Facebook (FB) dating service.

Not only did Match beat consensus expectations in the second quarter and raise its full-year guidance, Jefferies analyst Brent Thill says the quarter was even more impressive thanks to Match’s record-high 42 percent earnings before interest, taxes, depreciation and amortization margins.

Tinder revenue growth was up 136 percent in the second quarter, and its subscriber count was up 81 percent. Tinder has consistently been among the top five grossing iOS apps, and Thill says all signs are pointing to Tinder being in the early stages of its monetization growth. Tinder now accounts for nearly half of all of Match’s paid subscribers, and the company’s non-Tinder paid subscriber count actually declined by 9,000 users in the second quarter.

Tinder growth has helped drive a reacceleration of Match’s domestic business, but Thill says there are still some major international markets ripe for disruption. He says online dating has become mainstream in the U.S. but estimates only about 10 percent of international dates are arranged online.

Not only was Match’s 42 percent EBITDA margin its highest in history, Thill says only Facebook, Alphabet (GOOGGOOGL) and Booking Holdings (BKNG) have higher margins in the entire core internet space.

Concerns over a Facebook dating service have weighted on Match stock throughout most of the year, but Thill says those worries are mostly unwarranted.

“As a feature within core FB (rather than a standalone app) we get the sense that this is an additive feature to improve FB engagement rather than a full-blown effort to take over the industry,” Thill says.

Looking ahead to the second half of the year, Match is planning to invest heavily in promoting its recently-acquired Hinge dating app. Thill says Hinge has a lot of potential as a differentiated alternative to Tinder, and field checks have yielded mostly positive feedback. “We view…

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