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Match vs. Bumble: Which Online Dating Stock is a Better Buy?

In this article I will analyze and compare Match Group (MTCH) and Bumble (BMBL) to determine which online dating stock is currently a better buy.

Online dating is a service that is delivered through a particular website or mobile app, intending to build a personal and romantic relationship between users. Online dating apps often use smartphone’s GPS location feature and grant quick access to digital photo galleries, speeding up the process of dating.

According to Verified Market Research, the global online dating industry is expected to reach $10.87 billion, growing at a CAGR of 5.11% between 2021 and 2028. The increasing adoption of smartphones and the rising internet penetration worldwide should fuel the industry's growth during the forecast period. 

In today’s article, I intend to analyze and compare two online dating stocks, Match Group, Inc. (MTCH) and Bumble Inc. (BMBL), to determine which is a better buy. 

Founded in 1986, Match Group offers a portfolio of dating products around the world, including such brands as Tinder, Match, Meetic, OkCupid, Hinge, Pairs, PlentyOfFish, OurTime, and others. Based in Austin, Texas, Bumble is a technology company that provides online dating and social networking apps in the US and around the globe. 

Over the past six months, MTCH stock has fallen about 20%, while shares of BMBL dropped 43% over the same period.

Recent Developments 

On February 7th, Bumble announced the acquisition of one of the fastest-growing dating apps in Europe, known as Fruitz. The app is on demand with Gen Z, an influential segment of dating users. Under the terms of the deal, Fruitz will complement Bumble and Badoo apps. This acquisition should bring obvious long-term benefits for Bumble by increasing its market share and financial position. 

On December 9th, Spotify and Match Group's Tinder app integrated a new feature, known as Music Mode. Music Mode will let users hear a 30-second looped preview of potential matches’ chosen song, while checking out their profile. The feature is expected to enhance Tinder online dating experience. 

Recent Quarterly Performance & Analysts Estimates

On February 1st, Match Group, Inc. reported earnings for the fourth quarter of 2021. In Q4, total revenue rose 23.8% year-over-year to $806.07 million due to a 15% YoY increase in the number of payers to 16.2 million and an 8% YoY growth in Revenue Per Payer to $16.16. However, the company failed to meet the Wall Street consensus revenue estimates, thus missing by $15.09 million. Besides, the company reported GAAP EPS of ($0.60), significantly missing analysts' estimates of $0.60.

Furthermore, the company's fourth-quarter operating income increased 9% to $232 million. However, its operating income margin decreased by 390 bps year-over-year to 29%. 

A $0.50 consensus EPS estimate for the first fiscal quarter, ending March 31st, 2021, indicates a 23.94% year-over-year decrease. However, a $796.59 million consensus revenue estimate for the current quarter represents a 19.32% growth year-over-year.  

Bumble's total revenue for its fiscal third quarter, ended September 30th, 2021, grew 23.5% year-over-year to $200.5 million. The revenue growth was mainly related to a 38.9% Bumble App revenue increase to $142.49 million. However, Badoo App & Other revenue sank 2.9% YoY to $58.02 million due to the 8.5% decrease in Badoo App and Other Paying Users. Also, Bumble surpassed the Wall Street consensus revenue projections by $1.98 billion. The company reported a GAAP EPS of ($0.06), missing Wall Street estimates by $0.05.

Although its total paying users increased 4.7% year-over-year to 2.87 million, this figure dropped from the 2.93 million as of 2Q2021, thus concerning some investors. 

Analysts covering BMBL forecast that its EPS will stand at $0.10 in the fourth quarter of 2021. Additionally, a $210.30 million average revenue estimate for the fourth quarter represents a 26.99% rise YoY. 

Comparing Options Market Sentiment

Looking at the February 18th, 2022 option chain for both MTCH and BMBL, we can define options market sentiment by analyzing the open interest levels. In Match Group's case, the open calls/open puts ratio at the $113.00 strike price comes in at 2.6x, implying a bullish options market sentiment. When it comes to BMBL, the open calls/open puts ratio at the $30.00 strike price stands at 0.52x, indicating a bearish market sentiment.  

The Bottom Line

In my opinion, MTCH, at these levels, is a better long-term buy. Match Group’s collaboration with Spotify could increase the number of its users, thus positively affecting the financial position. Its financials also look better compared to BMBL ones mainly because of the positive tendency regarding paying users' growth. Moreover, MTCH delivered a higher paying users growth rate. Finally, MTCH has a relatively better options market sentiment. 

MTCH shares were unchanged in premarket trading Wednesday. Year-to-date, MTCH has declined -14.99%, versus a -4.19% rise in the benchmark S&P 500 index during the same period.

About the Author: Oleksandr Pylypenko

Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.


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