Tinder’s Tough Love Should Ultimately Serve Match Well

Growth at dating app Tinder, which has a base of 47 million monthly active users, has slowed.
Growth at dating app Tinder, which has a base of 47 million monthly active users, has slowed. - Sean Gallup/Getty Images

Honesty is the hallmark of any healthy relationship, but it can be painful at times.

Wall Street’s relationship with online dating giant Match Group has been in a rough patch for a while now. Slowing growth at the company’s flagship Tinder app, which accounts for more than half of Match’s total revenue, has soured investors. Match’s share price has fallen nearly 14% this year after losing 12% last year. At least they aren’t alone in the rejection pool: Online dating rival Bumble has shed 60% of its value in that time.

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Match’s first-ever analyst meeting this week was an opportunity to win back investors’ hearts. That didn’t quite happen: Match issued long-term targets for revenue and adjusted earnings growth through 2027 that was in line with what analysts already projected, while also forecasting a low single-digit decline in direct revenue from Tinder next year that was below the roughly 2% gain Wall Street was expecting. A new $1.5 billion buyback and the company’s first quarterly dividend didn’t sweeten the pot enough; Match’s share price has tumbled 6% since the meeting Wednesday.

Tinder remains the key issue. The 12-year-old app has amassed a base of 47 million monthly active users, making it nearly four times the size of Hinge, Match’s next-largest dating app. But that scale also makes Tinder fertile ground for bad actors and fake accounts. There is also the app’s long-running reputation as a hookup tool, which Match has been working hard to change. “The perception that Tinder is mainly for hookups has decreased 12 percentage points in the U.S. and the U.K. since our brand work began two years ago,” said Tinder Chief Executive Faye Iosotaluno at the analyst meeting. “We’re going to keep investing to drive home the message that Tinder delivers against many types of outcomes.”

Tinder also will be investing heavily to improve the user experience. Coming changes include requiring face photos and a “liveness check”—a biometric screening tool that uses the camera on a user’s phone to verify authenticity. Tinder will deploy more powerful artificial intelligence to improve the quality of user matches, as well as a “double-dating” feature, where users can pair up with friends and match with other pairs for dates. The breadth of the company’s planned changes to Tinder caught notice: “We believe stale product has weighed on Tinder [monthly active user] growth and are encouraged to see differentiated features in the works,” Nathan Feather of Morgan Stanley wrote to clients.