Before you get too excited, I’m not talking about the TV show. Unless you head to Vegas, there’s no way to bet on what outfits the contestants will be wearing, which bachelor will be chosen, or how many times Chuck Woolery will roll his eyes. Even in Vegas, you’d probably be out of luck, since last I heard there were no plans to bring the show back to life.
But you can make some money betting on the new dating game of the technology era.
It’s a business almost as old as time: linking together eligible singles in the hopes that some of them will have enough in common to start a successful relationship. But the days of your mom or your friends setting you up on blind dates with their friends are over. Heck, the days of joining a club or going to a bar to meet someone are practically over, too — thanks in large part to one particular company.
Internet dating sites aren’t really that new. For decades, we’ve seen ads on television for companies that promise to help you find that special someone. All you have to do is hop online, go to their website, and fill out a questionnaire and add a photo or two. And boom! You’d instantly be connected to other single (and sometimes not-so-single) people looking for love in the age of the Internet.
But over the past few years, as smartphones made their way into every aspect of our lives, a new trend has evolved. I’m talking about dating apps.
It’s Going Down, I’m Yelling Tinder!
Ever since I first tried the app upon the urging of friends, whenever I hear that Ke$ha song, I immediately replace part of the chorus with those words. Oh, Tinder! The way a new generation (and even some of the previous generations) finds love. Or at least keeps the social calendar full with dates and perhaps even some “hookups.”
Honestly, it’s kind of fun to just use the app. You download it, set up a very minimal profile, upload three to five pictures of yourself, and you can scroll through thousands of pictures of single folks. When you find one you think is cute, you swipe the picture to the right and see if they’ve done the same for you. If they have, then you’ve now got the opportunity to start a text conversation with them over the app.
If you get along, then you can exchange numbers and maybe take the relationship into the real world by scheduling a date. Even people who aren’t interested in a relationship (or even meeting new people) use it. My married female friends will steal their single girlfriends’ phones to “play Tinder” when they’re all hanging out having a ladies’ night. Some people even just use it as a self-esteem booster to make sure they’re still attractive to the opposite sex (or the same sex — whatever floats their boat).
But the point is that millions of people are on that one app alone. And there are hundreds if not thousands of apps just like that one. They all offer something a little different. Some offer a more select group of people — just Asians or just Jewish people, for example. And some require a more extensive personal profile — like OK Cupid, where you can answer questions about your personality and see answers others have given. Some are differentiated by country, and some base selections on politics or professions.
But any way you slice it, and no matter how you feel about this kind of courtship (if you can even call it that — I’ve known friends who patrol Tinder while taking a bathroom break at the office, and I can’t imagine a less romantic story to tell future kids), these apps are the future of dating.
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And there’s one company out there that owns a whole bunch of them… and therefore owns the content users upload as well as the right to advertise to those people and even sell them upgrades and extras within the apps.
Matchmaker, Matchmaker, Make Me a Match
The best part about this kind of company is that it mostly has fixed costs. Whether the apps have 10 users or 10 billion users, they cost the same amount to operate. So the dollars that come in from every new user flow much more directly to the bottom line of the balance sheet.
In fact, just last quarter, a 21% increase in revenue at this company led to an 82% jump in operating profits! That’s what we call leverage, and it’s part of what makes this company such a great investment. It’s also one of the reasons this company has beat analyst expectations for earnings every quarter it’s been in existence.
The other thing that makes it such a great investment is the addressable market of customers out there — literally hundreds of millions. User growth has slowed some in the U.S., but the international market is just heating up for this industry. More and more people in Europe, Asia, and Latin America are swiping right on dating apps, and that’s going to lead to even more and even bigger profits in the future.
Granted, yes, when the company successfully brings two people together into a lasting relationship, it loses them as customers. But the positive feedback that comes from helping two people find love will just generate more customers as they tell everyone how they met.
Any way you look at it (and no matter how you feel about online dating and dating apps), an investment in Match Group Inc. (NASDAQ: MTCH) is a smart bet on the dating game… one that’s going to score you big returns as more and more people sign on in hopes of finding true love (or just love for a night).
To Investing with Integrity (and a Right Swipe),
Jason Williams
Wealth Daily
Follow me on Twitter @AllBeingsEqual
