Match Group, Inc. (MTCH, Financial) (MTCH – $67)
Match Group operates a portfolio of the world’s leading online dating brands. The company’s flagship brand, Tinder, is the top dating platform in the world and holds a wide lead over its next largest competitors—several of which are also owned by Match. Because online dating is a network-effect business where each user makes the platform more valuable for others, we believe a market leader like Tinder has significant scale advantages. We believe this puts Tinder in an excellent position to address the more than 50% of singles in the U.S. and Europe who still haven’t tried online dating. We also believe Tinder’s monetization potential is underappreciated as its “freemium” model means the vast majority of users currently pay nothing for the service. With over 60% of its users active six days per week, the opportunity to increase adoption of paid features is substantial. Match is growing revenue in the high teens and the company has minimal capital requirements and operating margins that are already above 30%. We don’t believe Match’s current valuation reflects the company’s combination of exceptional economics and long-term prospects.
From Bill Nygren (Trades, Portfolio)'s Oakmark Fund first-quarter 2020 shareholder commentary.
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