The rise of dating apps has made it possible for people to connect with strangers without first meeting face-to-face. During the pandemic, the usage of dating apps was on the rise. With bars and restaurants closed, virtual dates were as good as it gets. Investors should reflect on how technology has changed the dating world and how much potential investing in dating app stocks has for the future.
Due to the rise of digital platforms that enable people to connect and find their partners, the dating services market awaits growth at an annual rate of 8.6% over the next three years. With the surge of online dating apps, it is not surprising that investing in dating app stocks is becoming more attractive.
The pandemic-caused increase in the usage of dating apps should be a positive for the long-term growth of dating app stocks. The global dating services market was valued at approximately 6.7 Billion in 2018. This market has in prospect a reach of around 9.9 Billion by 2026.
According to Statista, the online dating industry is expected to reach a total revenue of over US$3 billion in 2021. It’s also worth mentioning that Bumble, a popular dating app, filed for its IPO in 2021. According to MarketPlace, the number of daily active users of the top 20 apps has reached more than 1.5 million.
Before buying dating app stocks, it is advisable to analyze them thoroughly.
Online dating apps
An online dating application is a mobile application that enables users to connect and communicate without leaving their homes or office. It works seamlessly through a network of GPS-equipped smartphones and various digital photo galleries.
These apps allow users to easily browse and communicate with potential dates and potential romantic partners. The launch of Tinder in 2012 led to the growth of online dating apps. It established a new market for mobile apps. After the success of Tinder, many other companies started creating their dating apps, such as Match.com.
Other popular apps are Bumble, Grindr, and eHarmony. Due to the ability to identify people with similar interests, many religious dating apps have also emerged. Some of these include JDate, Salams, Upward, and JSwipe. Many of the apps that are available today are designed to match users based on their personality traits. These assessments help identify individuals who are compatible with each other.
Users can customize the matches they see in the marketplace. They can also exclude candidates that they do not want to match. Once users form an interest in a potential match, they can chat with that candidate. This method of communication saves users time and money. Online dating allows people to meet without having to work around their schedules. It also increases self-confidence by enabling users to see how many other potential matches are out there.
Almost 60% of Americans agree that online dating is a great way to meet people. Over 66% of them have gone on an actual date after meeting someone through an application.
Disadvantages of using online dating apps
Too many options can be overwhelming when it comes to choosing a potential partner. This variety can lead to users wasting their time and not finding the right one. In addition, the systems used for matching people may not always work perfectly. Therefore, there are no guarantees that the system will create a perfect match for everyone.
A person’s physical chemistry is very important when choosing a partner. However, a profile picture may not be sufficient when looking for the right match. In addition, some dating apps are vulnerable to phishing attacks, which can reveal sensitive information such as sexual orientations, e-mails, preferences, and degrees of interaction between the users. Due to the nature of online dating platforms, they are becoming a breeding ground for honeypots that create fake profiles and expose users’ private information.
Another issue is ghosting. Ghosting is a phenomenon that occurs when one party in a relationship suddenly stops communicating with the other party. Ghosting is a severe issue for dating apps as it can lead to users canceling their accounts. To prevent this from happening, many companies like Badoo and Bumble have launched new features that make it easier for users to end their chats nicely.
How Covid impacted the dating scene
The pandemic may have wiped out many of the fun things that used to be associated with dating, but the online dating industry is still going strong. Online dating has become an integral part of society, helping users connect and form lifelong relationships.
Online dating has remained relatively consistent globally since 2017. Despite the various changes in the industry, the figures for active users have remained pretty consistent. The rise of online dating services has emphasized the practicality of their services amid the pandemic. But, they have also catered to the varying needs of different audiences.
Like social media, dating apps have always been geared towards younger audiences. However, the evolution of the industry is happening too. Older users are starting to adopt digital services at an unprecedented speed.
Concerns about online safety and privacy are top of mind for most internet users, but among those with Gen X and boomer singles, the issue is more prevalent.
There has been a lot of discussion about how to recreate activities during the pandemic virtually, but platforms should not overlook the security and privacy considerations when doing so. Apps should maintain the same standards of safety for all audiences.
As we look ahead to the end of social distancing rules and the reopening of public spaces, we can hope for renewed enthusiasm in the hospitality industry. The reopening might lead to more users using dating apps and making plans to meet in person.
Virtual interactions have become the norm in various social events and activities during the pandemic. Online dating was already a cornerstone of social networking.
Post-Covid era for online dating apps
While many companies are working on developing tools that allow users to connect and communicate, the concerns around safety and privacy remain. Therefore, some companies are working hard on developing new features that would address safety issues. For example, Bumble made the platform a safer space for women because by using this app, women have the ability to make the first contact.
Due to the rise of internet use among older audiences, safety considerations will become more prevalent. These concerns were already around before the pandemic. While the growth of digital media has brought many changes, it has also provided many individuals with vital social connections. As brands look to the future, they must remember that social media and online dating are no longer separate entities.
Online dating is becoming more diverse, with many older users looking for love in new ways. During the pandemic, many people moved away from traditional notions of dating and into digital-first mindsets. After the COVID, the increase of online dating will slow down, though the real growth will still occur once dating hotspots open their doors. Companionship is vital to many people, especially those who are looking for love. For others, finding a partner online is a new experience. Safety concerns aren’t going away – dating platforms will be held to the same safety standards as social media platforms.
How to invest in online dating app stocks?
The coronavirus epidemics have widely impacted the rise of digital commerce, which caused consumers to become more digitally aware. A survey conducted by management consultancy McKinsey revealed that around 80% of Americans are still not convinced that outdoor activities are safe. Another survey conducted by the Shekel Group revealed that 87% of consumers prefer to shop at stores that offer self-service options.
These are not just limited to the retail industry. For instance, online dating has become a sought-after trend. Match Group, Inc., the leading online dating company, reported in early May that its average subscribers had increased 12% in the first quarter of 2021. Moreover, the changes in consumer behavior during the coronavirus pandemic will most likely endure. For instance, Momo Inc., which owns the popular Chinese dating platform, beat expectations by reporting a profit increase in the first three months of the year.
Momo’s monthly active users have reached more than 115 million. This number is an increase of more than 7 million from a year ago. Another stock that falls into the dating category is Netflix, Inc. (NFLX). The company launched an e-commerce platform to sell digital content and products separately from the company’s mainstreaming platform. The company will sell a range of products inspired by television series. Some of these include action figures and streetwear.
Technology has affected every aspect of our lives—even the finance industry. For example, the hedge fund industry is experiencing significant changes in the way it does business. Its reputation has been tarnished by the sudden decline in returns during the last decade.
Top dating app stocks on the market
In small change, Bumble changed the game’s rules, letting only women lead and make the first move following a match. This change eliminates the possibility for women to receive unwanted messages. It also allows men and women to reverse the roles they typically play in traditional dating environments.
Last year, the dating apps Bumble and Badoo reached more than 100 million users, just below rival Tinder’s total. Bumble also has a feature called BFF (best friends forever), which is for those looking for friendships rather than romantic relationships. According to the company, its user engagement has grown significantly over the past year.
Bumble’s market cap is around $9 billion. On top of it, its growth potential is immense. With a 21.4% market share as of April 30, Bumble is now the second-largest platform in the country, after rival Tinder. Its robust growth has helped it reach $170 million in revenue in Q1 2021. Despite this impeccable performance, the company is still operating at a loss due to its continued investments in innovation and product development.
Nevertheless, Bumble is one of the hottest dating app stocks on the market and investors can buy it on NASDAQ with the symbol BMBL.
Company Website: https://bumble.com/
Match Group, Inc. is a leading global dating company that owns and operates a variety of popular online dating platforms such as Tinder, OkCupid, Match.com, Hinge, Ship, OurTime, and Meetic. IAC is the parent company of the Match. In 2019, it had 9.283 million subscribers globally. In 2020, it became a separate public company.
The Match Group is the leading player in the online dating industry. The company owns the most extensive collection of dating apps in the US. Furthermore, Tinder is also the top-grossing non-game app in the world. That gives the company a significant advantage over its main rival Bumble, which went public in 2021. However, Bumble is still gaining ground and is anticipating further growth.
Despite the headwinds caused by the pandemic in 2020, the company managed to deliver a solid financial performance and remained one of the best dating app stocks for investors. Its robust subscriber growth helped push up total revenue by 17%. Moreover, the company used to have an even more successful performance in the past three years.
Investors should watch how Match can grow its subscriber base and monetize its platform in the coming quarters. With the launch of Tinder Platinum, the company plans to continue growing. Even though this new product will not be available for a few months, it will likely boost Tinder’s average revenue per user.
Investors should also keep an eye on the rivalry between Bumble and Match Group, as both are competing for the same users. If Bumble succeeds, it would threaten Match’s top line and dilute its earnings. Nevertheless, Match Group still looks like a good investment opportunity. The company’s competitive advantage, as well as its growing popularity, should continue to propel its stock price.
Company Website: https://mtch.com/
Momo Inc. is a mobile-based social platform. The platform enables users to communicate with each other and customize their profiles. The platform also offers various features and functionalities, such as its mobile application.
It enables users to maintain their relationships through private and group communication and its content creation and sharing features. It also offers various offline social activities through the platform. The app enables users to create social relationships based on their locations and interests. Users can discover people nearby and connect with them in a fun and easy way.
The company officially started operations in July 2011. A month later, the company launched the first version of its app for iOS. In November 2014, it filed for a NASDAQ IPO. It was listed in December of the same year. Momo is a mobile app that claims to find the most personalized matches for its users. A month’s membership costs around USD 2. If a user commits to long-term use, the membership fee will be less than USD 2.
A paid membership gives access to various benefits, such as VIP logos, advanced search options, and more. As of September 30, 2014, Momo had 2.3 million paid subscriptions. The company has integrated mobile games into its platform to monetize a large number of users further. Momo created Dao Dian Tong in August 2014. It is a marketing tool that enables local merchants to create profile pages for their businesses.
Members can now see businesses on the platform, just as they would see other users. Further plans include monetizing the users by referring them to e-commerce companies like Alibaba.
During the first quarter of 2021, 25 hedge funds held long positions in the company. A few hedge fund managers were notable for significantly increasing their holdings. MOMO’s all-time high was 45. According to calculations, MOMO is not among the thirty most popular stocks among hedge funds.
Renaissance Technologies, the largest investor in the company., held $201.1 million worth of the company’s stock at the end of December. Tiger Pacific Capital is the second-largest investor in the company with a $28.4 million position. Other notable investors include Islet Management, York Capital Management, and Yiheng Capital.
Tiger Pacific Capital’s 13F portfolio allocated the biggest weighting to the social media platform, around 5.13%. Symmetry Peak Management is also very bullish on MOMO, with a 2.54 percent position in the company. With a general bullishness among the significant money managers, key players such as Arrowstreet Capital were leading the way.
Arrowstreet Capital had a $10.7 million stake in the company at the close of the quarter. Noam Gottesmann’s GLG Partners also had a $9.6 million position. The new MOMO investors were: Granite Point Capital, Prem Wosa’s Fairfax Financial Holdings, Paul Marshall, and Ian Wace.
Company Website: https://immomo.com/
Spark Networks is a leading global dating company that is listed on the New York Stock exchange under the ticker symbol “LOV”. The company has a headquarter in Berlin and offices in Utah and New York.
The company’s growing portfolio of apps includes JSwipe, EliteSingles, Christian Mingle, Jdate, Silver Singles, Zoosk, etc.
Spark Networks SE is a leading digital platform that connects users. It was created through the merger of Affinitas and Spark Networks in 2017. The company has approximately a million monthly paying subscribers worldwide.
At the end of March, six hedge funds held stakes in Spark Networks SE. The decrease in sentiment was evidenced. The historical high of hedge funds invested is 9. LOV is not among the 30 most popular stocks with hedge fund managers.
Osmium Partners was the biggest shareholder of Spark Networks, with a stake valued at $26.1 million as of March.
Cannell Capital, which was behind Osmium Partners, had a stake valued at over $10 million. Osmium Partners is heavily allocated to Spark Networks (NYSE:LOV) and is relatively bullish on the stock in terms of the portfolio weights. With the decline in smart money interest, it has been speculated that some funds were exiting their positions before Q2.
Matthew Hulsizer’s PeAK6 Capital Management sold off its most significant stake in the 750 funds, followed by InsiderMonkey, while Nick Thakore’s Diametrics Capital also cut its position. As a result, total hedge fund interest fell by three funds in Q2.
Company Website: https://www.spark.net/
BlueCity is an online platform that enables the LGBTQ community to connect and thrive in every aspect of their lives. The Blued mobile app is a central hub of BlueCity’s various platforms and services. Its users can connect and access a variety of health-related services and solutions. That being the case, Blued has connected more than 54,000 000 users globally since June 30, 2020.
BlueCity Holdings is a small company with a market cap of US$244m, making it less likely to be spotted by many institutional investors. However, BlueCity Holdings has institutional investors. They hold a good portion of the stock.
Baoli Ma, the CEO of BlueCity Holdings, is the company’s largest individual shareholder. He owns 32% of the shares. Other major shareholders include Shunwei, Inc. and CDH Investment Management Company Ltd. No hedge funds own shares in BlueCity Holdings.
The top three shareholders have a majority stake in the company, which means that they can influence the company’s decisions. With a 23% ownership, the general public has a significant role in the company’s operations. With an ownership stake of 18%, private equity firms have a unique position to shape corporate strategy and value creation. Private Companies own 6.5% of this dating app.
Just like some other dating app stocks, Blue City Holdings has a listing on NASDAQ. The symbol is BLCT.
Company Website: https://www.blue-city.com/en
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