Don’t Bet Against Match.com IPO
Match Group, Inc. (NASDAQ:MTCH), which owns Match.com, Tinder, and OKCupid, generated a billion dollars in revenue in the last year. Finally, after leading the sector for some time, a Match Group initial public offering (IPO) has arrived and the online dating pioneer has gone public, despite skepticism from investors.
Last October, the company issued its request to list on the NASDAQ under the ticker MTCH. The Match Group IPO saw the sale of 33.3 million shares for $12.00 per share late Wednesday, which fell within the expected $12.00–$14.00 IPO price range, raising some $400 million. (Source: “Match shares jump in IPO debut,” USA Today, November 19, 2015.)
During its first day of public trading, MTCH stock jumped 8.67% compared to its IPO price of $12.00 set the day before, gaining 14.6% within a few hours of trading and ending the day up 23% at a per-share price of $14.74. (Source: Ibid.)
By comparison, the online payments provider Square, Inc. (NYSE:SQ), which also debuted Thursday on Wall Street, set an IPO price below expectations and just like Match, its IPO saw shares surge, ending its first day up 45%. Square set its IPO price at $9.00, below the planned $11.00–$13.00 range, and saw a high of 64% above its IPO price on its first day of trading. (Source: “Square, Match Gain in Market Debuts After Low-Priced IPOs,” Bloomberg Business, November 19, 2015.)
Part of the Match Group IPO sum will go directly to IAC (InterActiveCorp), a media and Internet company that was Match Group’s 100% owner prior to the company’s IPO. Following the IPO, IAC now owns about 86% of the company’s shares.
Match Group owns some of the best-known brands on the market when it comes to dating sites, with operations in 38 languages and 190 countries. The company holds Match.com, OkCupid, and Meetic, but it has been especially successful with Tinder. The popular mobile app utilizes a user’s geographic position to find suitable profiles meeting the user’s specified parameters, like age, to offer up a “smorgasbord” of matched profiles in the desired area and radius. The user can then just swipe right or left on a smartphone or tablet screen to approve or reject a proposed match.
Other companies in the industry include Zoosk, which specializes in online dating among other services, and Badoo, which is the largest site in the world of online dating. Zoosk was planning to list publicly but recently withdrew its request to list on Wall Street due to perceived unfavorable market conditions. (Source: “Zoosk Formally Withdraws IPO,” The Wall Street Journal, May 8, 2015.) Similarly, Badoo has been contemplating asking Wall Street for an IPO date for the past five years, but it has never made the move. (Source: “Badoo prepares for IPO, Russian founder remains incognito,” Arcticstartup, November 16, 2010.) Perhaps the companies are just shy, but the market is also wary of online dating.
However, Match has proven itself with a long history. Match.com is an Internet pioneer in the world of online dating. Launched in 1995, it has changed owners several times before being taken over in 1999 by Barry Diller’s IAC. Since then, it has become the undisputed world leader of online match services. Match Group acquired its popular rival Meetic in Europe and, eventually, the Tinder app.
Match has generated revenue of more than $1.0 billion and earnings of some $180 million over the last 12 months. In total, Match owns 45 matchmaking sites, which have drawn in 59 million active users worldwide, including 4.7 million premium members who pay for access to extended services. Tinder accounts for a significant portion of the company’s revenue. (Source: “UPDATE: Five things to know before IPO of Tinder parent Match Group,” Morningstar, November 18, 2015.)
Other publicly listed companies in the online matchmaking industry include China’s Momo Inc., the American Spark Networks, Inc., and the U.K.’s Cupid, which due to poor performance in key markets, have all seen their valuations drop significantly after their initial public offerings.
The Bottom Line on Match IPO
Part of Match’s IPO challenge will be to overcome the market’s suspicion of online dating, especially its wariness of the industry. Competition is tough and leaders are never safe from being rapidly overtaken. Such competition forces dating providers to spend huge sums on marketing and advertising to draw in users and maintain dominance. Nevertheless, Match has been cautious.