Match Group (NASDAQ: MTCH), the owner of several popular online dating websites, is currently priced at $38.59. Match’s 52-week high is just under $49. The company’s 52-week low is a mere $17. Match subsidiaries Plentyoffish Media, Hinge, Eureka and Tutor.com have proven wildly successful in recent years.
Let’s break down this love-maker to determine if it should be a part of your portfolio.
The Business of Love
Love has been and always will be in demand. Even if humanity eventually transitions toward automated “sexbots” for affection in the decades to come, Match could easily transition to pairing people for social purposes beyond dating. The bottom line is those who invest in Match are investing in something just about every human craves: the company of others. Human beings are social animals, so why not profit off of it? Match just might be the best way to make a considerable amount of money on the universal desire for love and companionship.
Match by the Numbers
Though Match has only been around for a mere three years, its stock has proven quite successful.
Prospective investors should be aware that Match has a controlling shareholder. This group, IAC/InterActiveCorp, has an 81 percent ownership interest as well as a 97 percent voting interest. Match earned $1.3 billion in revenue in 2017. The company has a market cap of 12 billion, a P/E ratio of 26 and a beta of 0.16. Those interested in value investing are looking for a P/E ratio between 15 and 25. Match’s P/E ratio is slightly high, yet still quite reasonable when compared to other companies’ P/E ratios.
If you are on the prowl for a company with minimal volatility, Match is worth your attention. Match’s minuscule beta (0.16) means you can park your hard-earned money in the stock with confidence. According to Yahoo! Finance, Wall Street analysts are quite bullish on Match. The average analyst recommendation is an impressive 2.4 on a scale in which 1 equals a strong buy and a 5 is a sell.
Timing is Everything
Readers are likely questioning whether Match is worth their money at this point in time as the stock has had quite the hot streak of late. Match stock increased double digits across the past few months. The company owes some of its success to its extensive media and analyst coverage. Rest assured, recent alterations to the business’s outlook have already been priced into the current price of $38. The question is whether this is the optimal time to scoop up Match shares.
If you read the analysts’ reports, you will find most agree Match is somewhat overvalued at its current price. However, perceived overvaluation has not stopped the masses from dumping copious amounts of cash into Match as well as numerous other popular stocks. Those who break down the numbers are quick to point out Match’s intrinsic value is likely around $26 per share even though the stock seems to have stabilized around the $40 level.
A Look the the Future
Prospective Match investors should focus on Match’s future as opposed to its past and present performance. Investors keen on growth stocks will likely be quite pleased with Match’s performance across posterity. There are even some rumors Facebook is looking to acquire an online dating company in an attempt to broaden its horizons and expand revenue streams. Alternatively, if Facebook remains self-reliant in its attempts to pair love-seekers, Match could become ensnared in a nasty competition with the social media giant.
If you are intimidated by the prospect of Facebook stealing Match’s market share, steer clear of this stock. However, it will likely take Facebook half a year or so to roll out any sort of dating features on its platform. Match executives and Wall Street analysts predict the company’s profit will increase by nearly 25 percent across the next two years. The high cash flows and elevated share valuation makes Match quite the attractive investment.
Add in the fact that there will never be a shortage of people looking for a significant other, and a position in Match becomes that much more tempting. Young adults (millennials) are the country’s largest age cohort. These tech-savvy individuals are inclined to look for love on the web with Match’s subsidiaries. More importantly, is the fact that the majority of millennials are single, making them a perfect match for Match Group (pun intended).
Buy, Sell or Hold?
It does not matter that Match is somewhat overvalued at its current price. This company is a pioneer in the booming online dating business. Add Match to your portfolio, check its price every couple of months for peace of mind, and hold on for the long haul.