Facebook is a beast unlike any other that Match Group has seen
- Match Group, owner of Tinder, tumbled after Facebook announced plans to create its own dating app.
- Facebook will challenge one of Match Group's key advantages in the market, scale and reach.
- Still, the dating-app market may be big enough for both players.
- Watch Match Group and Facebook trade in real-time.
Tinder-parent Match Group tumbled 22% Tuesday, its largest one-day drop ever, after Facebook CEO Mark Zuckerberg, while speaking at the F8 developers conference, announced the social-media platform is planning to enter the dating-app sphere. The lack of detail around Facebook's upcoming dating app presents uncertainty and concern over whether the owner of OkCupid, Match.com and PlentyOfFish can keep up with the social-media giant.
Still, the dating-app market has yet to reach its saturation point and Jefferies analyst Brent Thill says, "Longer term we do believe the market is big enough for both players." He imagines a scenario in which Match Group might offer premium dating while Facebook releases a more casual offering.
"Ultimately we don't believe the impact will be catastrophic, but the increased uncertainty around FB's offering (timing, geo rollout, layout) creates a tough setup for MTCH near term," Thill wrote in a note where he downgraded Match to hold from buy and slashed his price target by 20% to $40 a share.
Thill points out Match Group's scale and reach had always been its advantage in the dating-app market. However, that advantage will disappear once Facebook enters the industry as the social-media giant holds the resources to build a large scale product. With approximately 2 billion users internationally, Facebook is unlike any of Match Group's previous competitors.
Match Group shares are up 12.5% this year.
