With many single Americans bored and lonely, and fear of the novel coronavirus among young people waning, it’s a pretty good time to buy Match Group (NASDAQ:MTCH). As you probably guessed, investors in MTCH stock are buying a company focused on dating websites and apps.
As someone who has worked at home for many years , I know that it can, at times, be lonely. Since I moved in with my then-girlfriend in April 2018 (she became my wife last year), my life has become much less lonely. But working from home as a single person wasn’t always easy.
Bored and Lonely
My point is with millions more single people working at home, many of them are likely to become lonely. And, in a trend that will greatly benefit MTCH stock, lonely, single individuals are more likely to look for people to date than those who aren’t too lonely.
Meanwhile, in a few parts of the country, people aren’t allowed to dine indoors in restaurants. Further, many people can’t interact face-to-face with their parents, grandparents, other relatives and friends who are quarantining. Some do not want their children to see people aside from their immediate family.
A friend of mine who lives in New York City and is single told me that most people in Manhattan aren’t going out much. Because he’s an employee of the New York City Board of Education, he’s not working. Not surprisingly, my friend is seeking someone to date, and, in an effort to accomplish that goal, he’s accessing multiple dating websites.
Also positive for MTCH stock is the fact that, as I’ve noted recently, fear of the coronavirus has dropped tremendously among non-elderly, healthy people. Consequently, there are likely many who, like my friend, are ready to get back into the dating waters. Many also are prepared to use dating websites and apps to do so.
Data Has Validated My Thesis on MTCH Stock
Validating my thesis, Match Group on April 1 reported that “existing users, particularly under age 30, are increasingly turning to our products to cope and connect.” The company stated that on its Tinder app, “conversations and conversation length are up 10-30% since” the Covid-19 crisis began.
On the newer Hinge app, which tries to match people with individuals their friends know, message volume jumped 30% in March, the company reported.
Match Group added that “new users, especially over the age of 30, have been less inclined to sign up for our products.” But, now that the economy has improved and young, healthy people are much less scared of Covid-19, I’m sure that situation has changed drastically.
Strong Brands and Profit
Match Group has some of the strongest apps and websites in the online dating sector. Specifically, it owns PlentyofFish, Tinder, OKCupid, and, of course, Match.
In the first quarter, the company’s operating income surged 13% year-over-year to $135 million, while its revenue increased 17% YOY to $545 million.
Importantly, its average subscriber base jumped 15% to 9.9 million.
The Bottom Line on MTCH Stock
The valuation of MTCH stock is reasonable; it’s changing hands for just 20 times analysts’ average 2021 earnings per share estimate for the company.
Given that the company’s engagement has likely been surging tremendously in recent months and the fact that its brands are extremely strong, I believe that MTCH stock can easily, within the next year, rally to 20% above it 52-week high of $108.45.
That would not be a huge gain, but it would not be too shabby either.
Consequently, I recommend that conservative, long-term term investors buy the shares.
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer. As of this writing, Larry Ramer did not own any of the aforementioned stocks.