Finding love in a time of corona is tricky, converting activity into paid accounts is harder yet
Meet-cutes are tricky when bars and coffee shops are all boarded up. One enterprising gentleman in New York made headlines for using a drone to ask his neighbour out on a date. For most people, however, finding love in the time of coronavirus means tapping on a smartphone. Dating apps need to make more of this near-captive audience.
Match Group, the company behind Tinder, OKCupid as well as its namesake app, has seen a surge in messages sent across all platforms, peaking around mid-April. Tinder, which accounted for more than half of Match’s revenue last year, reported an all-time high for the number of daily active users and swipes. The largest increase came from women under the age of 30. Young women are thought to spark higher levels of use from other demographics, suggesting numbers could keep rising.
Bullish investors have rewarded the company by bidding the shares up 82 per cent from their March lows. That puts the stock back closer to the record high of $92 reached in January. Its valuation of 42 times forward earnings is a discount to the recent high of 48 times but still looks rich considering Match’s near-term challenges.
Converting higher user activity into paid accounts is the main dilemma on executive minds. Although the basic Tinder app is free, Match pulls in revenue from premium subscription levels such as Tinder Plus and Tinder Gold. When it comes to paid accounts, new users are swiping left. The company warned this week that it was seeing headwinds to “the motivation to pay”, particularly from older users.
To keep up momentum and covert users into subscribers Match must show that its apps are more than just a way to kill time in lockdown. It is bulking up video chat and live streaming features to encourage people to date by phone or video. Nervous users will need to be convinced. A video on-demand coaching service is available for those who need pointers on digital etiquette. A confidence coach might be useful too.
Reference: Financial Times
