Online dating is already the standard, not the exception. But one company accounts for most of the money flowing in this business - it manages Tinder, Hinge, Match.com and other brands, has revenues of around $3.5 billion, gross margins of over 70%, adjusted EBITDA margins of over 35% and free cash flow approaching $1.1 billion a year.
Yet the stock trades at only about 15 times net income and about eight to nine times free cash flow, multiples that are more typical of the average communications services title than a global industry leader with such profitability. The market discounts stagnant revenues, declining payer numbers and increasing competition in the price, but it also overlooks how rapidly monetization per user is growing, how much room AI features have, and how aggressively the company is returning cash through buybacks and the dividend.
Top points of analysis
Revenues of around $3.5 billion have been essentially flat for the past two years, but profitability is improving -…