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Is Online Dating Good Business?

With romance in the air (and on the TV) during the holidays, we take a look at the business of online-dating.

December 6, 2022

With the holidays approaching, so come the Hallmark Holiday movies, romantic comedies that usually involve mistletoe, some “holiday magic”, and two people overcoming the odds to fall in love. I’ve never been one to believe in holiday magic and usually side with team Scrooge when it comes to the holidays, but I do believe in love and the value of finding the right partner to share this life with, or at least holiday gatherings. 

I am a woman of a certain age and always thought that I could just find that partner organically. Maybe not under the silly circumstances that are depicted in the holiday movies, but meeting someone in person doing activities that I usually do. However, it turned out that my usual activities did not lend themselves to meeting people. And so, like so many people, I reluctantly tried online dating. 

This may not be atypical to younger generations who grew up with technology and had it literally in the palms of their hands. For me, however, the whole process was daunting. It turns out there are many “rules” to online dating that one learns (or doesn’t) along the way. There are also many dating sites from which to choose and each different site seems to attract different clientele. Therefore choosing the right site for you can contribute to your finding the right person. With many of the popular sites going public, choosing the right site could also contribute to your finding the right company for your portfolio.

Finding Riches in both your Portfolio and Love Life

As a user of online dating sites, I never considered the business model of online dating. Given that I always thought I would meet someone organically, I had resisted paying for the service (and yes, many sites offer access for free.) After a year of trying different sites and meeting all sorts of people that I would never have crossed paths with using conventional methods, I came to the conclusion that you get what you pay for. Yes. I actually paid these businesses for the ability to message with a potential partner. 

I am not alone in this. In fact, online dating is a $8.9B market and growing at a CAGR of 6.9% from 2022 to 2030 according to Grand View Research. The growth rate in memberships can be attributed to many things: more young, single people who are used to meeting people through technology, more people with smartphones, a decrease in the stigma of online dating, even COVID-19 and isolated people wanting to find someone to interact with. I also found that the process of finding and vetting a potential partner through an online dating site feeds back on itself. With the ability to select someone from hundreds of profiles on one’s phone, the possibility of finding someone who was better is literally a swipe away. 

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Should Investors Swipe Left?

Each dating site might have a different gimmick, for example, Bumble (NASDAQ: BMBL) requires that women make the first move. It also enables friendships and business connections. Grindr (NYSE: GRND) is a dating app catered to the LGBTQIA+ community. It recently went public through a SPAC. Match Group (NASDAQ: MTCH) consists of dating sites Tinder, OkCupid, Plenty of Fish, and, with each site a different gimmick. These sites use gimmicks to attract different types of people with different interests – they need that large pool of users to attract even more users. Regardless of the people each site attracts, they all follow a similar subscription-based business model. The length and price of the subscription may vary from site to site. And while each site says they are in business to help its users not have to use the site, the behavior dating sites promote encourages a constant search for a person that might be better in some way.

I did pay for several apps until I eventually found the person who is now my fiance. I have no plans to use a dating site again. Ever. And while there was no holiday magic (the process to get to the point of finding my person out of all the possibilities was quite an experience and I do have notes to write a book about it someday), there certainly was a happy ending. Are dating sites great? I certainly learned a lot about myself and humanity in general through the process. Are they a good business? Yeah, the business model is sound and there are only going to be more and more people who have a desire to use them. Is there one that you should invest in? Well, just like the sites themselves, you need to find the one that best aligns with you.

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