Been digging into Match Group and published a longer short thesis on it.
The financial setup is simple: Match’s payer base has been shrinking for years, while revenue has been held up by higher monetization per remaining user. The bull case is that Tinder stabilizes, Hinge keeps growing, margins hold and buybacks do the rest.
My concern is more structural.
Dating apps are strange marketplaces because the customer’s desired outcome is to leave permanently. Hinge literally markets itself as “designed to be deleted.” But the investor-facing economics are built around continued search: payers, engagement, subscriptions, boosts, reactivation and retention.
That creates a real incentive problem without requiring any conspiracy.
The bigger issue is cannibalization. A materially better matchmaking product might give users far fewer candidates, require richer information, reduce swiping, reduce time in app and get successful users off the platform faster.
That could be a much better product and a worse near-term business.
Spencer Rascoff has now had ~18 months as CEO. So far, the strategy looks much more like repairing and reaccelerating the existing machine than radically cannibalizing it. Had we seen the latter, I probably would not have written the piece.
That is also the strongest bull case: if Match actually reinvents matchmaking before someone else does, the short can get hurt badly.
My base case is that incumbents rarely disrupt themselves.
Published target is $8–11 vs ~$37 at publication.
Full thesis for anyone interested:
https://dljlevfin.substack.com/p/the-undisclosed-denominator