Match Group Solves Facebook’s Greatest Dilemma
Quick! Name a company that’s figured out how to do what Facebook can’t.
Any guesses? Okay, I’ll admit it’s a loaded question – one that could take you in many different directions.
So I’ll just tell you…
The answer, surprisingly, is Match Group (Nasdaq: MTCH).
If you’re not active in the dating scene, then here’s a quick summary. Match Group is the company behind dating and hookup apps, such as Match, Chemistry, OkCupid and Tinder.
Last week, in the midst of one of the worst market environments of the last five months, Match Group reported terrific first quarter results: Profits, revenues and subscribers were all higher. In response, the company’s stock popped 12% to an all-time high.
But let me get back to Match Group subscribers for a moment because this is the truly revolutionary aspect of this company.
You see, Match Group just added 384,000 new subscribers to Tinder. That means the company now has 4.7 million subscribers, all of whom are paying to use its app.
That’s right. You have a social media app – with paying subscribers – that is rapidly growing.
This is a very big deal.
Very quietly – and without much fanfare – Match Group has successfully been able to crack the social media code that has plagued Facebook for years… getting users to pay for its service.
Match Group has solved this vexing problem. And that’s why I’m bringing it to your attention today. Just look at this chart!
Match Group’s stock price has gained 81% over the last 52 weeks – compared with a 2.99% gain on the S&P 500 over the same time frame. This raises an obvious question: Will the gains continue?
I’m here tell you that yes, there’s a very good chance they will. And here’s why…
Action Plan: Even with the big upside move in Match Group, the company still has a high short position. Oftentimes, this leads to more violent upside moves. For example, Match Group still has 18 million shares short, which is around 39% of its float. Granted, this number was taken as of April 29, but I still believe we could see more “short covering” upside moves ahead. Therefore, Match Group shares are ones I’d be looking to buy on dips.