Today, various companies providing app-based services are seeing a boost. Recent news that Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google store has cut fees has sent shares of various dating app stocks higher.
Of course, a number of factors are at play with these dating app stocks. Investors may be enamored by the potential reopening thesis with dating apps in general. As dinner and a movie becomes a possibility again, folks want to get out, preferably with a partner. The expectation for many investors is that dating apps could see increased traffic as folks wander out of hiding.
However, this high-growth segment has been an intriguing one to watch. Growth hasn’t necessarily materialized to the extent many bulls have called for. And those bearish on dating apps in general may note that a pandemic reopening may be bearish for this segment. After all, folks can now go to bars and clubs and date the “old fashioned” way.
That said, let’s dive into today’s news a bit more and discuss why investors are growing bullish on these dating app stocks.
Dating App Stocks Surge on Google Store Fee Cuts
Who said competition is dead in the Big Tech space? Following a move by Apple (NASDAQ:AAPL) to cut its Apple store fees, Google has done the same. Today, the company announced it’s lowering service fees in its App Store to keep up with the competition.
Given the 15% to 30% commission paid to these various app stores for the honor of listing an application, any sort of cut is welcome by investors. Indeed, these moves directly impact the bottom line of dating apps such as Bumble and Match. A JPMorgan analyst recently estimated that this competitive price-cutting from Apple and Google could result in a significant margin boost for dating apps. It’s estimated that Match and Bumble could both see margin bumps between 5% and 10%.
For investors, this is big news. Any time the underlying economics of a business improves, so too should the valuation. Accordingly, today’s upside momentum in both Bumble and Match appears to be warranted. Investors are excited for a reason. And I think more upside could be on the horizon for these two names.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.