Thread by @ojaz12

Bought a starter position in Match Group. Here’s why:

1) Tinder! If you’re single, try it. Women get a ton of attention, while men get to fish where the fish are, spending boatloads of money to stand out. 5 mil. subscribers, and thus IMO a very, very long growth runway. $MTCH

2) Online dating used to be a local, or at least a country-level thing. Tinder is has changed this. We’re living in a more and more globalized world, people come around a lot. No matter where you’re from, if you’re up for a date, Tinder is the place to be. Winner takes it all.

3) In it’s early days, Tinder had a hookup image. Today it’s still used for that (or at least some may hope for it), but the spectrum has expanded: killing time, finding a partner, or just like-minded people in new places. Below is the 5y google trends; note the tipping point:

4) Online dating has lost its stigma and is getting VERY important. The online dating market analysis by @SuperMugatu is a must-read:
gallery.mailchimp.com/2506bda6ca9a8b…

5) Tinder clearly is the crown jewel in the dating app portfolio of match.com. It’s simple, easy and quick to install and use. But for people seriously seeking the partner of their life, more serious, data-driven, dating apps exist and Match owns them (in the US).

6) Dating apps are a good, capital light business model with nice economies of scale. Match.com is very profitable and it’s margins are on a clear upward trend.

6) The business model is good, the apps are strong. But is the business trading at an attractive valuation? I believe the answer to this is yes. The TTM PE is ~40, but the 2019 PE is just 35. Based on my expected Q4 EPS, the annualized PE is little more than 30.

7) Revenue growth was 22.5% in the last quarter and is accelerating (!). Tinder grows revenues at 50%, thus getting increasingly important. The major reason I invested now is because I believe match can grow revenues at >20% for many years (more confident than for $goog or $fb).

8) Along with the revenue growth, I expect further margin expansion. Moreover, Match produces significant free cash flow and uses that to buy back shares, buy new dating apps, pay special dividends... Put simply: management is quite shareholder friendly and uses cash efficiently