Love in the Time of Covid Bodes Well for Tinder and Hinge


The course of true love never did run smooth. Nor does the business of love.

The first half of the year wasn’t good for dating apps. Living under stay-at-home orders, singletons weren’t spending more money on technology to help them find romance. There was little point, with many date spots — bars, restaurants and cinemas — closed.

But as the lockdowns eased over the summer, the search for love or something like it resumed with vigor. Match Group Inc., the parent company of Tinder, Hinge and OkCupid, enjoyed a record $84 million sales increase in the three months through August, as it added 1.1 million subscribers. With social distancing measures in place, dating apps became one of the best options for meeting new people.

It augurs well for the dating giant’s prospects in the post-Covid-19 era, whenever that may be.

Love in the Time of Covid Bodes Well for Tinder and Hinge

A second wave of the virus and the ensuing shelter-in-place measures will likely dampen growth for the rest of the year. After the 16% third-quarter sales increase, growth probably won’t exceed 2% for the rest of the year, Match said on Wednesday. That still beats previous analyst expectations. Perhaps with the current grim state of the pandemic in mind, Match refrained from offering any 2021 guidance.

Even as it predicts lower growth, the company is finding ways to ensure its existing subscribers keep paying for its apps. Tinder, which accounts for more than half of Match’s revenue, is rolling out a new video chat service, dubbed Face to Face, which lets would-be paramours have a virtual date. 

Match went through a breakup of its own this year. The firm was spun out from IAC/InterActive Corp. in July in a complicated transaction that resulted in Match transferring much of its cash to the parent company, which owned more than 80% of the stock. The deal left Match with a sizable net debt pile representing more than four times Ebitda, an earnings measure. That’s a lot for an internet company with relatively low growth.

Match’s ability to grow Ebitda more quickly than revenue, as it did in the third quarter, should provide some relief to investors. Chief Executive Officer Shar Dubey seems focused on keeping homebound love-seekers paying for the premium product, and the revenue bump over the summer hints at the bonanza that might be in store once lockdowns ease again. That might make it easier to justify the company’s generous valuation of 56 times forward earnings, which gives it a market capitalization of $35 billion.

Love in the time of plague might not be a brilliant business. But love immediately after it looks promising.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.

©2020 Bloomberg L.P.

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