By Mary-Lynn Cesar for Kapitall Wire
Online dating is going mainstream. This week-just in time for
Valentine's Day-the Pew Research Center released a
new study on online dating
and found that 15% of American adults have used online dating sites
and/or mobile dating apps, up from
11% in 2013
. The study is based on a survey of 2,000 U.S. adults that was
conducted in summer 2015.
And the rapid growth in online dating is as much about money as
it is love.
Young adults are leading the surge in online dating, with usage
among 18- to 24-year-olds almost tripling since Pew's 2013 online
dating study. Call it the Tinder factor: 22% of young adults have
used a mobile dating app, compared to just 5% just two years
earlier. Aaron Smith, author of the report, told NPR that mobile
apps' appeal lies in their simplicity and "
game-ified way of engaging with other people
." Crafting snappy blurbs and swiping right or left are a lot
easier and less time-consuming than writing a painstakingly
detailed profile for a traditional dating site like OkCupid.
But young people aren't the only ones in pursuit of the
digital get down
. The study reveals that 55- to 64-year-olds are also flocking to
online dating, with 12% of older adults having tried it-double the
6% reported back in 2013.
Online dating is a big market. Here in the U.S., the industry
$2 billion in revenue each year
and expanded at an annual rate of 5% between 2010 and 2015. This
helps explain why
) decided to spin off its online dating assets last year with the
) IPO. Match, whose portfolio includes OkCupid, Tinder and
Match.com, went public in November at $12 a share, and although the
stock is trading below its IPO price, it currently boasts a market
cap of $2.3 billion.
Online dating is also gaining traction overseas, most notably in
China, where revenue is
estimated to total $1.6 billion
for the year by the end of 2016. Investors are interested in the
market's potential: last year, German media firm Bertelsmann
invested $5 million in dating app Tantan, while Sequoia Capital and
Vertex Venture Holdings put $20.5 million into Qingchifan, yet
Still, despite the increasing popularity of online dating,
concerns remain over the industry's ability to generate a profit.
The biggest issue is that, when the apps work and people find
partners, they stop using the service. As a result, dating apps
must be adept at acquiring new customers. Unfortunately, as the
Wall Street Journal
, most dating apps don't experience the same meteoric rise that
Grindr and Tinder have, and users generally don't recommend the
latest apps to their friends.
first quarterly earnings
illustrate the potential hurdles within the online dating industry.
While the company beat expectations with $0.24 earnings per share
compared to the consensus estimate of $0.19, revenue came up short.
Analysts had expected $272 million for the fourth quarter, and
Match generated $267.6 million. Following the earnings report,
Barclays downgraded the stock, and both JPMorgan and Merrill Lynch
lowered their price targets.
Keeping these challenges in mind (as well as the industry's
growth), let's take a look at what analysts expect to see from
online dating companies when they next report earnings.
Analysts provide estimates for various aspects of a company's
operations, including its net income, earnings per share and
revenue. The consensus estimate, which is the average of the
provided figures, is then used as a benchmark come earnings season.
If a company surpasses estimates, that's a positive earnings
surprise and can boost a stock. On the other hand, missing
estimates is a negative earnings surprise and can tank a stock.
Just look at
Below is a list of online dating stocks and analyst estimates
for their next quarterly earnings and revenue.
Click on the interactive chart to view data over
1. Jiayuan.com International Ltd.
): Operates an online dating platform in the People's Republic of
China. Market cap at $214.19M, most recent closing price at
Jiayuan's portfolio includes Jiayuan.com and izenxin.com, among
Average earnings estimate for Q4 2015: $0.14 per share.
Average revenue estimate for Q4 2015: $28.68 million.
2. Spark Networks Inc.
): Provides online personals services in the United States and
internationally. Market cap at $85.29M, most recent closing price
Spark's portfolio includes ChristianMingle.com and JDate.com,
among other properties.
Average earnings estimate for Q4 2015: -$0.01 per share (or a
loss of $0.01 per share).
Average revenue estimate for Q4 2015: $12.14 million.
3. Match Group Inc.
): Provides dating products. Market cap at 2.35B, most recent
closing price at $9.70.
Match's portfolio includes Match.com, OkCupid, PlentyOfFish and
Tinder, among other properties.
Average earnings estimate for Q1 2016: $0.08 per share.
Average revenue estimate for Q1 2016: $282.14 million.
(Price and market capitalization data sourced from Zacks
Investment Research. Analyst estimate data sourced from Yahoo!
Finance. All other data sourced from FINVIZ.)
Kapitall Wire is a division of New Kapitall Holdings, LLC.
Kapitall Generation, LLC is a wholly owned subsidiary of New
Kapitall Holdings, LLC. Kapitall Wire offers free investing
ideas, intended for educational information purposes only. It
should not be construed as an offer to buy or sell securities, or
any other product or service provided by New Kapitall Holdings,
LLC, and its affiliate companies.
Securities products and services are offered by
Kapitall Generation, LLC