FA Alpha Daily

Swipe, match, and repeat

In the age of digital connectivity, love can sometimes begin with a simple swipe. With a significant boost in growth due to the COVID-19 pandemic, dating apps have been redefining courtship, with Match Group leading the charge with apps like Tinder, Hinge, and OKCupid, among others. However, mounting concerns about addiction and a legal challenge questioning their design have brought the delicate balance between profit and user well-being under scrutiny. In today’s FA Alpha Daily, we delve into Match Group’s market position, the controversy over retention practices, and the industry’s ethical obligations.

FA Alpha Daily:
Wednesday Credit
Powered by Valens Research

Dating apps have seen explosive growth over the past decade, becoming a mainstream way for people to find potential partners.

This trend accelerated even further during the COVID-19 pandemic, as social distancing measures left many seeking online connections.

While numerous dating brands launched with different focuses or features, one company has emerged as the undisputed leader—Match Group (MTCH).

Match Group owns leading apps like Tinder, Hinge, OKCupid, and others, dominating the global online dating market.

Tinder in particular has achieved unparalleled success. Since its 2012 launch, Tinder revolutionized the concept of swipe-based dating and amassed over 10 million paid subscribers.

Though competitors launched, they were often adopted alongside rather than instead of Tinder.

Match Group’s ownership of multiple top apps, along with its “pay-to-stand-out” subscription models, have helped make it highly profitable. However, some argue these business practices may also be fueling addiction among users.

Users report feeling entangled in the “addictive nature” of endless swiping, as Match Group continues “gamifying” the user experience through features like boosts and super likes.

There is evidence many users struggle with “burnout” from the overwhelming process.

These concerns came to a head in February 2024, when a class action lawsuit was filed accusing Match Group apps like Tinder, Hinge, and OkCupid of being “designed to be addictive and encourage compulsive use.”

The suit claims Match Group’s algorithms are intentionally optimized for “hooked” behavior over meaningful connections.

Match Group denies the allegations, calling the lawsuit “ridiculous”. However, if found valid, it could significantly impact the company’s profitability and set legal precedents around ethics in user retention design.

As dating and socializing continue shifting online, Match Group’s dominance looks poised to grow if legal issues can be overcome.

But the controversy also highlights the need for responsible product stewardship, as dating apps increasingly impact the mental well-being of millions worldwide.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research

This analysis of Match Group (MTCH)’s credit outlook is the same type of analysis that powers our macro research detailed in the member-exclusive FA Alpha Pulse.

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