Are Dating Apps A Good Investment?

Published on November 29, 2022 at 8:20 am by Fatima Farooq in Hedge Funds, News

In this article, we will be taking a look at whether dating apps are a good investment. To skip our detailed analysis of dating stocks and this sector and see some best dating stocks to buy, go to 2 Best Dating Stocks to Buy.

In March 2022, Grindr Inc (NYSE:GRND), a leading dating platform for the LGBTQ+ community, announced that it was intending to become a public company. The company did not decide to go public via an initial public offering (IPO), but rather it took the route of merging with a Special Purpose Acquisition Company. Grindr Inc (NYSE:GRND) thus merged with the SPAC Tiga Acquisition Corp., in September. The same day, it also debuted on the New York Stock Exchange (NYSE) under the symbols GRND and GRND.WS. After it went public, the gay dating app’s stock skyrocketed by over 400%. It started on the market at $16.90, later hitting a high of $71.51 before midday. The stock finally closed at $36.50, representing an increase of 214% compared to the last trading session before its SPAC merger.

Grindr Inc’s (NYSE:GRND) decision to go public this year may be representative of an overall increase in popularity when it comes to dating stocks. The unmatched success of renowned names in the dating app sector such as Bumble Inc. (NASDAQ:BMBL), Match Group, Inc. (NASDAQ:MTCH), and Hello Group Inc. (NASDAQ:MOMO) may be paving the way for companies like Grindr Inc (NYSE:GRND) to begin their journeys on the stock market as well.

The market for online dating is also one that major companies are now beginning to venture into, because of the sheer investment opportunities and growth prospects available there. According to a Polaris Market Research report on the online dating market published in 2021, the global online dating application market was worth about $7.55 billion in 2021. This figure was expected to grow at a compound annual growth rate (CAGR) of 12.65% during the forecast period of 2022-2030. With growing interest in online dating represented by a primarily Millennial user base and the increasing use of social media applications and smartphones, the online dating market is benefiting immensely.

The most popular dating applications like Tinder, OkCupid, and Bumble have seen the highest growth in user activity over the past few years. For instance, in 2020, Tinder accounted for about 3 billion swipes in a day, while date records on OkCupid increased by 700% between March and May 2020. For Bumble, an overwhelming increase of 70% was recorded in the use of video calls in that year. The report forecasted that by 2030, the online dating market’s value would rise to $12.65 billion, growing at a CAGR of 6% between 2022 and 2030.

Investors are now beginning to renew their optimism when it comes to investing in dating stocks. Bumble Inc. (NASDAQ:BMBL) and Match Group, Inc. (NASDAQ:MTCH), the biggest players in the online dating market, have managed to retain positive analyst ratings well into 2022. As of November 9, Bumble Inc. (NASDAQ:BMBL) had 10 Buy ratings and seven Hold ratings, while Match Group, Inc. (NASDAQ:MTCH) had 16 Buy ratings and five Hold ratings, according to Bloomberg data.

Photo by Yogas Design on Unsplash

Bumble Inc.’s (NASDAQ:BMBL) revenue is expected to rise further by 21% this year, while its competitor Match Group, Inc. (NASDAQ:MTCH) is expected to raise its revenue by 6.9% as well. Balance sheets and numbers have been stabilizing for both companies near the end of 2022, inspiring renewed confidence in their stocks and in the online dating market in general, as investors move forwards into 2023.

Let’s now take a look at the 6 best dating stocks to buy right now.

Our Methodology

We have selected dating stocks that have proven to be popular among consumers prone to using dating applications and social media. Using Insider Monkey’s hedge fund data for the third quarter, when 920 hedge funds were tracked, we have attempted to show the popularity of these stocks among elite hedge funds in 2022 as well. As such, they are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest. We have also taken into account the growth potential exhibited by these companies based on the strength of their balance sheets, their revenue growth over at least the past year, and their growing popularity based on the number of monthly active users they have, among more.

6 Best Dating Stocks to Buy

5. Grindr Inc (NYSE:GRND)

Number of Hedge Fund Holders: N/A

Grindr Inc (NYSE:GRND) is a company operating a social network platform for the LGBTQ+ community. The company’s platform enables gay, bisexual, transexual, and queer people to engage with each other online, share content and experiences, and express themselves.

This year, Grindr Inc (NYSE:GRND) decided to go public, making the dating-app operator a new addition to investors’ portfolios. In November, the company’s stock soared by as much as 515% after its merger with SPAC Tiga Acquisition Corp. About 98% of the shares were redeemed ahead of the closing. On November 18, shares of Grindr Inc (NYSE:GRND) opened on the market at $16.90 and shot up later to a session high of $71.51. The company has also released its preliminary 2022 results. For the first six months, it reported adjusted revenue of $90 million, showing a 44% increase over the same period last year. Its adjusted EBITDA rose by 26% as well between 2021 and 2022, to $42 million.

Glazer Capital was the largest stakeholder in Grindr Inc (NYSE:GRND) in the third quarter, holding 2.7 million shares worth about $28.5 million.

Like Bumble Inc. (NASDAQ:BMBL), Match Group, Inc. (NASDAQ:MTCH), and Hello Group Inc. (NASDAQ:MOMO), Grindr Inc (NYSE:GRND) is a dating stock many investors are beginning to develop an interest in today. Even though the stock has recently gone public, major funds like Glazer Capital have already begun picking it up for their portfolios.

4. Spark Networks SE (NYSE:LOV)

Number of Hedge Fund Holders: 5

Spark Networks SE (NYSE:LOV) is a communication services company operating in the interactive media and services industry. The company operates online dating sites and mobile applications, focusing on catering to the 40+ age demographic and religious communities in North America and other international markets. It operates its dating platforms under the Zoosk, EliteSingles, Christian Mingle, Jdate, JSwipe, and SilverSingles brands. The company is based in Berlin, Germany.

Spark Networks SE (NYSE:LOV) is the fourth-largest subscription-based dating company in North America and Europe based on revenue. Most of its revenue comes from monthly subscriptions to its dating platforms, while advertising sales also make a contribution. Over 90% of its overall revenue is drawn from the US, Canada, UK, France, and Australia. Leadership at Spark Networks SE (NYSE:LOV) stated in the first quarter that they expected the company’s 2022 revenue to grow by mid to high single-digits on a year-over-year basis. Analysts estimated that the company’s revenues will rise by over 20% in 2022, to nearly $235 million. This is expected to be followed by over 10% sales growth in 2023 to a projected $260 million.

Five hedge funds were long Spark Networks SE (NYSE:LOV) in the third quarter and in the previous quarter as well. Their total stake values were $12.5 million and $20.8 million, respectively. Osmium Partners was the largest stakeholder in the company, holding 5.7 million shares worth about $10.9 million.

3. Hello Group Inc. (NASDAQ:MOMO)

Number of Hedge Fund Holders: 17

Hello Group Inc. (NASDAQ:MOMO) is also a communication services company providing mobile-based social and entertainment services in China. The company operates the Momo platform, including its Momo mobile application and various related properties, features, tools, and services. Its application connects people and facilitates their interactions based on their locations and interests. Hello Group Inc. (NASDAQ:MOMO) also operates Tantan, a social and dating application, enabling users to find romantic connections and meet new people.

The near-term growth prospects for Hello Group Inc. (NASDAQ:MOMO) seem promising since its balance sheet is stable enough to support a long period of growth stagnation through the utilization of accumulated cash. Since the company is currently trading below $5, there is a substantial upside based on its lower valuation according to analysts. The company’s Momo application has 114.5 million monthly active users, while Tantan has another 27 million of them. In June 2022, Hello Group Inc. (NASDAQ:MOMO) had sales amounting to $470.4 million and a gross income of $198.5 million. In the second quarter of 2022, its EPS came in at $0.32, beating estimates by $0.06. The company’s revenue was $450.32 million.

There were 17 hedge funds long Hello Group Inc. (NASDAQ:MOMO) in the third quarter, and 16 hedge funds long the stock in the previous quarter. Their total stake values were $114 million and $91.5 million, respectively. In the third quarter, Farallon Capital was the largest stakeholder in the company, holding 123.4 million shares.

Like Bumble Inc. (NASDAQ:BMBL) and Match Group, Inc. (NASDAQ:MTCH), Hello Group Inc. (NASDAQ:MOMO) is among the most popular dating stocks on the market today. As a result, many elite hedge funds have bought shares in the company, hoping to profit off of its prospective long-term growth.

Click to continue reading and see 2 Best Dating Stocks to Buy.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on May 2, 2024 at by Insider Monkey Staff

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

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Should I put my money in Artificial Intelligence?

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Click to continue reading…

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