Wells Fargo initiated coverage of two major players in the online dating industry, Match Group (NASDAQ:MTCH) and Bumble (BMBL).
For Match Group, they started with an Equal Weight rating and a $32.00 price target. Despite Match Group's appealing valuation at 9x projected 2025 EBITDA, concerns center around Tinder's overearning and Hinge's growth potentially not adding significantly to the company's overall value.
Notably, Tinder, despite branding challenges, remains a preferred choice among users of swipe-based dating apps. However, Match Group's growth in certain European markets seems affected by Hinge's rise, which appears to be at Tinder's expense.
Wells Fargo gave Bumble an Overweight rating with a $19.00 price target. This optimistic outlook is based on Bumble's consistent share gains in the online dating market and its potential to continue adding around 500,000 new subscribers annually, even in a slowing market. “While Bumble isn't a structural share gainer, it is benefiting from underinvestment at industry incumbent Tinder,” commented analysts at Wells Fargo.
The introduction of 'Premium Plus', a new subscription tier for Bumble, is expected to support revenue growth. Despite facing competition from Hinge, Bumble's growth trajectory seems well positioned, particularly with its effective marketing strategies, positioning it as a notable player in the industry.
Match Group shares closed with nearly a 2% loss, while Bumble rose more than 1% today.