Is it a good idea to fall in love with stocks? The answer in most cases is no. Stocks are supposed to make money and compensate for the risk of investing money in them. But if you must attach emotions to your stocks, then those with dating apps can offer a mix of emotions that seem hard to resist.
Excitement, love, happiness, fun, and even romance. Add safety and anonymity when you follow common sense logic and do not reveal sensitive personal data, and you can see what drives people to to invest in online dating app stocks.
I would argue that the coronavirus has disrupted dating a lot, and while it may not change dating forever, dating app usage has grown during the pandemic. This should be supportive for dating app stocks long term.
According to a report on Valuates Reports about a dating services overview, global opportunity analysis, and industry forecast from 2019 up to 2026 “The dating services market size was valued at USD 6.7 Billion in 2018, and is expected to reach USD 9.9 Billion by 2026, registering a CAGR of 5.2% from 2019 to 2026.”
Other data from Statista about online dating worldwide mention that online dating is expected to bring in $3.2 billion in 2021. Also, “Revenue is expected to show an annual growth rate (CAGR 2021-2024) of 9.3%, resulting in a projected market volume of US$4,230m by 2024.” The United States is expected to make up a big chunk of that revenue.
It’s also worth mentioning that popular dating app Bumble has filed for its IPO, expected in 2021. Dating app usage is growing during the pandemic. Which is good news for dating apps stocks. MarketPlace mentioned that “According to data company Apptopia, the top 20 apps have gained 1.5 million daily active users this year.”
Here are three dating apps stocks to give love to in 2021:
Dating Apps: Match (MTCH)
Match Group is a key player in online dating worldwide. It has invested a lot to build a broad portfolio of popular dating app brands, including Tinder, Meetic, OkCupid, PlentyOfFish, and of course Match. The company has its headquarters in Dallas.
With a current market capitalization of over $42 billion, Match is a large-cap stock. And with a trailing price-earnings ratio of 80, it is not cheap. But it has performed well, with gains of about 131% in one year. In 2021 the stock is up about 5%.
Match stock has several things to like. It has an increasing positive operating margin, and increased book value per share, and positive free cash flows. What is negative though is the increase in its debt level. The debt/equity ratio in 2018 was 0.79 and jumped to 1.07 in 2019.
Match stock is not a value stock. But on the other hand, it is a growth stock as its expected EPS (earnings-per-share) growth for the next three-to-five-year is 10% according to Zacks.
Spark Networks (LOV)
Spark Networks is also a company with a variety of online dating sites and known dating platforms such as Zoosk, EliteSingles, eDarling, JSwipe, SilverSingles.
It is a small-cap stock with a market capitalization of about $144 million. It is a very volatile stock as it has a beta (five-year monthly data) of 1.98. This simply means that in theory, the stock is two times as volatile as the overall stock market.
It has positive revenue growth which could turn into profitability soon, including revenue of 105 million (in EUR) in 2018 increased to 149 million (in EUR) in 2019, an increase of 42%. On a trailing-12-month period the revenue has increased furthermore to 203 million (in EUR) looking at data taken from MorningStar.
The stock is up 43% in 2021 and 62% in the past three months.
Momo is a Chinese company that operates its Momo mobile application both for social and entertainment purposes and Tantan a social and dating app targeted mostly to young users online. It is a mid-cap stock with a market capitalization of about $3.7 billion. And it seems to be cheap, with a P/E ratio (trailing-12-month) of just 9.8.
There are plenty of things to like about MOMO stock. The company has a strong balance sheet with plenty of cash and a relatively low level of debt. The sales growth is hard to ignore.
In 2017 revenue reported was $1.35 billion, which increased 53% to $1.95 billion in 2018 and a further 21.52% increase to $2.43 billion in 2019, according to Gurufocus. The profitability is good too with a net margin of 15.74% for the trailing-12-month period, although it has declined compared to the previous years.
One of my most favorite key financial metrics is free cash flow per share, because it relates to the valuation of the stocks. And MOMO stock has performed well. In 2018 free cash flow per share was $2.07. In 2019 this figure increased to $3.33 per share. An increase of about 60%. And book value per share has also increased adding value to the shareholders.
MOMO stock seems to be the value stock among all these dating apps stocks.
Dating apps seem to have a strong demand amid the pandemic. A more thorough fundamental analysis is suggested for the dating apps stocks before buying them. They could well provide diversification to your portfolio and even potential profits to love them, if you make the right match.
On the date of publication, Stavros Georgiadis, CFA, did not have (either directly or indirectly) any positions in the securities mentioned in this article.