- Tinder owner Match Group shouldn’t be worried about Facebook‘s entrance into online dating, Jefferies analyst Brent Thill says.
- Companies that have experienced a Facebook intrusion have historically seen solid share performance after the social-media company entered their business.
- Evidence shows users are prone to staying on Match, even if they also choose to use Facebook.
- Watch Match Group trade in real time here.
Facebook is taking a page out of Amazon‘s book by stepping into new territory, potentially at the expense of Match Group. In early May, the social-media giant announced it’s launching an online-dating service, causing shares of Match to sink 16% in one day.
This isn’t the first time a tech giant has flaunted its influence in ways that hurt smaller, fledgling companies. Amazon’s entry into a number of industries – from shipping to groceries to healthcare – has caused headaches for competitors including UPS, Kroger, and Walgreens, who stand to be disrupted. Business Insider has developed a term for this, calling it getting “Amazon’d.”
But Match, which owns Tinder and OkCupid, has nothing to worry about, Jefferies analyst Brent Thill wrote in a note out to clients. “While there is often an initial doomsday reaction, many of those companies have not been impacted longer-term,” he said.
In fact every one of the companies that, in theory should be negatively impacted by Facebook’s entrance into their market, are up at least 20% since Facebook joined the competition.
Well, now Facebook is stepping into Match’s territory. Match is dominant in online dating, Match-owned Tinder was the most used dating app in first-quarter 2016, according to Survey Monkey Intelligence. OkCupid, also Match owned, was third most used.
While Thill noted that Match bears will say Facebook’s dating service most closely resembles its core social-media service, Thill refuted that with one pertinent fact. His checks with users show “many users do not wish to mix their private online dating life with their social media platforms.”
Plus, it’s not as if using one dating app means cancelling one’s account on another. In a survey of 600 users, Thill found that 61% of users said Facebook’s service will be an “additive” to the market, rather than a takeover of the market. Additionally, 60% of respondents are on more than one dating app.
Another layer of shelter Match can bank on is industry expertise.
“The portfolio approach is a big advantage for Match, enabling them to target different demographics and needs,” Thill wrote, meaning that Match owns so many different dating apps that it has the data and insight at its finger tips to target different demographics with precision. “FB may find it difficult to create a one size fits all product.”
Thill did point out that only 10% of Match users pay for the service, and that Facebook is following the standard playbook with its free service. But at this stage in the game, the question is about where users will go. And for Facebook, “it will be difficult to provide a meaningful edge if there are no premium features to improve the experience and likelihood of a match.”
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