Is your portfolio having a hard time finding love in the market? Raymond James analyst Andrew Marok talks with Julie Hyman and Josh Schafer about which dating app stocks investors should swipe right on.
Grindr (GRND) shares are up over 38% year-to-date, while Bumble (BMBL) is down 58% over the same period. Match Group (MTCH) – the parent company of online dating apps and websites Tinder, Hinge, Match.com, OKCupid, Plenty of Fish – is down nearly 6% in 2024, but has seen a slight uptick in its share price over the past month.
Marok notes that the generational differences between Gen Z and Millennial users are evident on these apps, especially in the heterosexual dating scene. Younger users entering the dating scene prefer in-person events and activities rather than swiping for matches.
“These two generations have opposite preferences in terms of how they enter into relationships. And because these apps were largely built by millennials for millennials, it was pretty difficult to manage the shift to Gen Z preferences,” explains Marok. “We haven’t seen that much in the gay dating market, which is why Grindr has been quite successful while the others have faltered.”
Marok emphasizes that dating apps with more specific goals are getting more response. Some of them even have features and in-app settings to connect and find friends or even professional connections.
“Hinge is doing really well and is resonating well with Generation Z. I think the focus on more serious relationships rather than a swipe-based model is quite positive. Grindr is doing really well because it serves a pretty wide range of social contact needs within the gay community.”
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This article was written by Luke Carberry Mogan.
Video transcript
Max Bumble and Grinder dominate the online dating scene.
But the shares of these companies did not enjoy general popularity last year.
We’ll look at how to navigate the dating landscape in your portfolio using the Yahoo Finance playbook.
Joining me now is analyst Andrew Merrick Raymond James. Andrew takes a look at these three stocks over the past year and they really are very different stories.
So look at Grindr, the stock has risen sharply.
The performance of the other two stocks was nowhere near as good.
You can see exactly what is going on in the room on your screen.
And does that say more about the future of the dating app space or is that a company-specific story?
And there’s a real reason that’s driving grinders up the ranks.
Thank you for letting me be there.
Yes, I would say the single biggest factor we are seeing in the online dating space today is a generational shift between Millennials and Generation Z, particularly in the heterosexual dating market.
Um, you know, these two generations have kind of opposing preferences in terms of the way they approach relationships.
And since these apps were largely developed by millennials for millennials, adapting to Generation Z’s preferences proved quite difficult.
Um, we haven’t seen that so much in the gay dating market, which is why Grindr has thrived quite a bit while the others have faltered.
So, Andrew, is this an existential threat to these services?
I think they have to start over again in quite a significant way.
Um, we heard that Bumble talked about re-orienting its strategy for the future on its last quarterly earnings call.
I think this will manifest itself in many different and interesting ways in terms of the user experience.
But yeah, I think the swipe-based model we’re all familiar with, especially from Tinder and Bumble, doesn’t resonate as well with Generation Z as it does with Millennials.
Andrew, Generation Z just doesn’t want to do that on their phone?
I look around in New York City, there’s a huge trend there at the moment.
You see it on TikTok, running clubs, right?
Now everyone goes to clubs and wears a black t-shirt to meet people on the West Side Highway.
Is this the place where Generation Z wants to meet people now?
Is it just not on their phones?
How might people have thought that this was the case?
I think this will increasingly be the case.
That’s correct.
This is not to say that Gen Z is giving up on user growth on dating apps. Even though it is below historical levels, this still supports the thesis that Gen Z and younger users are at least getting on board with the apps. However, they are showing a preference for face-to-face connections and the running clubs are a good example of this.
You know, we’ve seen a rise in in-person events that are specifically geared toward singles, which is very much geared toward the Generation Z market.
And I think that the use of these apps may not directly compete with that of dating apps, but there is at least some competition, right?
Because if you spend your time meeting people offline, you don’t necessarily spend your time on the apps.
So what do you do?
They said they tried to solve this problem, they started from scratch. I believe Bumble offers a friend service where you can meet friends through the app.
Is this the right technology? What should they do?
Yes.
And I don’t want to give the impression that every dating app in this area suffers or, you know, is significantly compromised.
We’ve seen apps like Hinge do really well and resonate with Gen Z. I think the focus on more serious relationships rather than a swipe-based model is a pretty positive push.
Um, the fact that it serves a pretty broad spectrum of social contact needs within the gay community is very well received.
Um, I wish I could pinpoint exactly what product or feature Generation Z is looking for.
Um, but I think we’re going to have to do a lot more testing and experimentation on some of the big apps before we see a concrete path forward.
And hurry Andrew, before we let you go.
I’m curious about the concept of meeting friends through these apps, right?
For example, we know that Bumble released this. Is this part of the disgusting story?
Isn’t the disgusting story enough to get you upset at this point?
I think it could be interesting, but I don’t know if I would necessarily call it a major driver of a recovery for the company or the stock.
Um, Bumble uncovered some interesting facts during the testing of its BFF offering: um, users using BFF and the dating apps were significantly more engaged than those using pure dating partners.
Uh, we’ve seen Grinder’s usage per user to be much higher than many of its, uh, relationship counterparts, particularly because it facilitates so many non-relationship based connections for gay men.
Um, but yeah, II, I think it’s something that might be interesting, but maybe not, you know, the main reason.
All right, Andrew, thank you very much for joining us today and explaining this to us.
