Dating apps: mix and Match

It’s tough out there on the dating scene. Valentine’s Day ramps up the pressure. But singletons should know they are at least highly valued by US equity markets. Dating app Bumble went public this week at a higher than expected valuation, raising $2.2bn. Rival Match paid $1.7bn for video chat company Hyperconnect.

A dispiriting two-thirds of single US adults last year told researchers from the Pew think-tank that dating was going “not well”. Online matchmakers are increasingly sought out to help. In the US, 12 per cent of adults met their partner online. Younger people and lesbian, gay and bisexual adults are most likely to take the plunge. 

Bumble stands out in the miscellany of dating apps for its “women message first” approach, which it claims encourages civility. Launched in 2014 by Tinder co-founder Whitney Wolfe Herd and backed by private equity firm Blackstone, its valuation has jumped from $3bn to $13bn in just over a year. Such heights echo recent tech IPO success but it may not be sustainable. The first-day price pop means Bumble now trades at 18 times forward sales. Match trades at 16 times.

Match, parent of brands such as OkCupid and Tinder, is the reigning champion in US dating apps. Bumble, which also owns the Badoo app, reports 42m monthly active users. Just 2.4m of them pay a subscription to see which users like their profile. Match has four times as many. Bumble is spending large sums to draw in new users and made a loss on revenue of $417m in the first nine months of 2020. At Match, Tinder alone accounted for $1.4bn in sales last year.

With free cash flow of $746m, Match is expanding its services. If successful, it will put pressure on Bumble to do the same. But Match’s cash and shares purchase of South Korea’s Hyperconnect, which facilitates remote video chats and broadcasts, is a risk. Lockdowns halted in-person dates, spurring online courtship. That could all be about to change. The end of the pandemic will be good for the real-life romances fostered by chance face-to-face meetings. That will be bad for dating apps.

The Lex team is interested in hearing more from readers. Please tell us what you think of online dating companies in the comments section below