A New Way to Cash in From Online Dating

Match Group Inc.’s (NASDAQ: MTCH) largest domestic rival is set to go public. And it could open up a huge opportunity for early investors.

Late last year, I wrote about the evolving dating scene, especially in 2020. Rather than lower interest as social distancing and lockdowns kicked in, Match reported growing interest.

As noted, then, investors have jumped on this growth too. In fact, the company’s shares have continued their rapid rally:

Virtual or digital dates across Match’s platforms (Tinder, OkCupid, Match.com, etc.) have turned into a major moneymaker for the company.

With fewer options for actual dates, users ended up spending more time chatting and communicating through the dating apps themselves.

But Match isn’t the only player in this game. It may be the largest. But it does have some serious competition.

And that competition is set to explode out of the gates in coming days.

Bumble’s Monetization

Last month, Bumble Inc. announced its plans to IPO. Since then, investor enthusiasm for the deal has boomed.

Today, the company announced that it was raising both the number of shares it will put on the market as well as the price tag for those shares.

At 45 million shares priced at about $38, it expects to raise a whopping $1.7 billion. That’s on top of recent private fundraisings in 2020.

Meaning, this is going to be one flush company when it starts trading.

And that’s key. Because that means expansion.

Ordinarily, when a company first IPOs, it is still struggling to monetize its goods or services. Expansion is troublesome if it means extending losses in more areas.

That’s not the case for Bumble.

While Match is still the king, Bumble has found a way to blow the giant away on a per-user profit basis.

The company has a number of ways to make money from each connection, communication and service it offers.

The platform is built on a women-first model. Meaning, in heterosexual connections, the woman has to be the first one to make a move.

Those first moves cost money. And each connection is time-limited, only extended through paid subscriptions or Bumble Coins, which can be bought for $1.99.

That’s a far more profitable approach than its competitors’.

Match’s Tinder, for instance, does offer two premium subscription options. But it sells “Boosts,” which just allows for its users to show their profiles to more people.

Once a connection is made, Tinder becomes rather difficult to monetize. That’s not so for Bumble.

It has built a platform based on continuing relationships and communications (for a fee). And with its focus on women-first, it has been able to cultivate a more unique niche in the dating market.

The other major advantage Bumble has over its counterparts from Match is its first-to-market video services.

While Tinder is still testing out its new video dating setup, Bumble has been doing it for years.

In fact, Bumble launched in-app video chat back in 2016.

That is part of the reason why it was able to gain so many new customers this past year, as more were forced to stick with video dating.

Opportunity Scale Remains Enormous

As noted in December, the sheer size of this opportunity is kind of hard to wrap your head around.

While online dating has become the most popular way relationships begin in some places, it is only starting to grow in others.

Match expects around 75% of singles around the world to eventually start using dating apps. In some places, like India, that number is still just 11%.

Meaning the opportunity is vast. Bumble might not need to beat Match in every place or with every feature for them both to win in this game.

And post-IPO, with its enormous treasure chest, Bumble will be able to start staking out new geographic regions of its own.

This is one new-to-market play you should keep an eye on.

To your prosperity and health,

Joshua M. Belanger