Match Group (MTCH) and Bumble (BMBL) have shown that dating is a serious business. Both companies are making good money out of it, and see more room for growth in the future. However, their stocks have been battered amid the selloff that has hit markets across the board. Match shares have dropped 45%, while Bumble shares have slipped 35% year-to-date.
Sometimes it makes sense to buy when others are selling, which is why you might be looking to buy the dip in Match or Bumble. The future of the online dating business looks promising. According to Grand View Research, the global online dating app market size is forecast to grow to $11 billion by 2028, from $7 billion in 2020.
Match and Bumble both make money from selling subscription plans and advertising space. The question is, between MTCH and BMBL, where can you expect more bang for your buck?
Using TipRanks’ Stock Comparison tool, I have compared these two stocks.
Match Shines If You Want to Bet with Market Leader
Match operates a portfolio of dating apps. Its top brands are Tinder, its namesake Match, and Hinge. Its other apps are Meetic, OkCupid, OurTime, and PlentyOfFish. The U.S. is its largest market. Match’s largest international market is Japan, where it operates an app under the Pairs brand.
The company reported a strong Q1 2022, with revenue growing 20% year-over-year to $799 million. The profit jumped to $180.6 million, from $173.8 million for the same quarter the previous year. Match ended the quarter with $912.6 million in cash.
Tinder is Match’s crown jewel. The company continues to explore additional opportunities to grow the flagship app. Tinder teamed up with Netflix (NFLX) on a joint marketing campaign for the dating reality show Love is Blind in Japan. As COVID-19 pandemic lockdowns ease in Japan, Match sees a great opportunity to accelerate Tinder’s growth in the market.
In another attempt to make the most of Tinder, Match plans to introduce paid features targeting female users on the app. It is a step that could see it squeeze more subscription revenue from the platform.
The growth opportunity for Match in the dating market is huge. While it has attracted some 100 million monthly active users across its apps, it sees more than 700 million people that could use its apps.
While it continues to drill for more opportunities in the dating space, Match is also expanding its scope as it works to further diversify its business. It recently launched a special type of app called Stir that targets single parents. Stir could be a major hit considering that the single parent segment looks underserved.
Match stock trades at a price-to-sales ratio of 6.79 and a PE of 78.
Wall Street is highly optimistic about Match stock, rating it a Strong Buy based on 14 Buys and two Holds. The average Match Group price target of $120.81 implies an upside potential of 57% to current levels.
Bumble Gets What Match Lost?
Even as the market leader, Match cannot afford to rest on its laurel because rival Bumble could exploit the opportunity and overtake it. Bumble operates the namesake Bumble, Badoo, and Fruitz dating apps. It had a strong Q1 and issued an upbeat outlook, which triggered a rush into the stock after the results came out.
The Bumble app, where women are the first to make a dating move, is the company’s flagship product. In the pursuit of new growth opportunities, the company is making a big international expansion push. A major focus has been on regions such as Western Europe, Southeast Asia, and Latin America. The management recently explained that the Bumble app is growing particularly rapidly in India.
The company is also expanding beyond the traditional dating market and tapping into the social connection space. For example, it wants to enable people to build regular friendships and professional networks. Bumble is also seeking opportunities in the virtual goods business, such as the sale of virtual flower gifts.
Bumble stock trades at a price-to-sales ratio of 4.77 and a PE ratio of 8.1.
Wall Street is cautiously optimistic about Bumble stock with a Moderate Buy consensus rating. That’s based on 10 Buys versus four Holds. The average Bumble price forecast of $30.93 implies 38% upside potential to current levels.
Final Thoughts
Match and Bumble both have the room to keep growing, and their diversification efforts are commendable. Match stock gives you exposure to the market leader in a lucrative business. However, Bumble stock comes at a more attractive valuation. Additionally, Bumble stands to benefit where Match executes poorly.
Overall, Match is a Strong Buy stock, according to analyst consensus, with a higher upside potential than BMBL stock. Therefore, Match stock seems like the better choice.
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