Match Group, the parent company of dating app Tinder, released its first ever earnings report on Tuesday, and despite missing analyst expectations on revenue, banks are feeling confident about the app’s ability to make money.
The concept behind Tinder is simple: you swipe right when you see someone you like, and if they also right-swiped you then you match and can start talking.
Tinder is now focusing on turning that model into a viable business that can bring in advertising money from paid campaigns, as well as income from users who sign up to a paid version of the app.
Deutsche Bank said in an analyst note about IAC, the large internet company that spun out its dating properties into Match group, that “Tinder is a real business. We get it.”
The stock market, however, wasn’t so bullish on Match Group. The company’s shares were down 16% on Thursday, which followed a 13% drop the day before. The revenue miss in Match’s first ever earnings report hurt the stock hard.
Match Group disclosed some numbers about Tinder during its earnings call. It said that more than 60% of Tinder users come from outside North America, according to Goldman Sachs.
One number that Match Group didn’t disclose during its earnings call was how many people pay for Tinder. Tinder Plus costs around $2.99 (£2.05) a month for users who want access to extra features like more “super likes” (a way to show someone that you liked them before they have swiped you) — but that price increases to $19.99 (£13.71) a month for users over the age of 30.
JMP Securities published an analyst note on March 31, 2015 that predicted Tinder would have 1.6 million paying users by 2016. But current estimates of the app’s paid userbase are far lower: Goldman Sachs estimates that the app has 900,000 paying members, and Wells Fargo says Tinder has around 805,000 paid-up members.
Analysts are positive about Tinder, though. BMO highlighted the advertising opportunities and viral growth of Tinder, as well as the mainstream adoption of online dating. Deutsche Bank said that “Tinder is the key to the bull case and outperformed expectations.” And Wells Fargo said “we believe high level of Tinder engagement sets stage for regularly paced product improvements, feature launches, and future ramp of advertising revenue.”
However, Barclays suggested that it could be tough for Tinder and other Match Group products to meet their guidance for the current quarter. “We believe management’s 2016 guidance will require near seamless execution that could be difficult to achieve amid heavy competition, particularly on mobile,” the bank said.
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