Swipe Right on Match Group (NASDAQ: MTCH)

The S&P 500 surged more than 2% yesterday. Match Group NASDAQ: MTCH went up even more, gaining nearly 6% and setting all-time highs.

The move came right before Q3 earnings, which were released after the bell yesterday. The report was impressive, and shares tacked on another 3%+ in after-hours trading. Revenue was up 18% yoy to $640 million, handily beating estimates of $605.1 million. Earnings didn’t beat by as much, but were still a penny higher than expectations.

Tinder, which is responsible for more than half of Match’s revenue, had a strong showing. As well as the app has performed in 2020, it has even better days ahead.

Tinder is Growing Faster Than Expected

At the end of Q3, Tinder had 6.6 million paid subscribers, up 440,000 from the end of Q2. That easily beat expectations of a 284,000 gain, and blew away the 128,000 that were added in Q2.

A lot of people are bewildered at Tinder’s success during the pandemic. Are people really dating more than they were before March? Probably not. But it would make sense that people are doing more online dating now. Currently, singles can’t really meet at traditional places like coffee shops, bars, parks, etc. So, they are instead connecting online. Even if they aren’t actually meeting up as much as before, that craving for connection – any type of connection – is enough to drive Tinder’s success.

But is Tinder tapped out? It is already, after all, the #1 most downloaded and highest-grossing dating app in the world.

No. For two reasons:

1. It’s Global

Tinder isn’t just an American phenomenon – it has gone global. The app is available in over 40 languages, and that number will only increase over time.

The thing is, Tinder still has a lot of room for expansion. Companies like Netflix NASDAQ: NFLX and Spotify NYSE: SPOT have well over 100 million paid subscribers – and still growing rapidly – at similar price points. Tinder has 6.6 million.

Yes, those companies have much larger addressable markets (all people vs. singles), but 51% of Americans between the ages of 18-34 are single. Thirty-five percent of the overall American public is single. The world data is certainly different, but it’s clear that Tinder has a ton of upside.

Furthermore, the singles population around the world is expected to increase at a moderate rate through 2024.

2. Tinder Continues to Innovate

Tinder does an excellent job monetizing its user base with features such as super likes, unlimited likes, boosts, etc. It’s easy to convince singles to upgrade their memberships or pay for a la carte features with love always right around the corner. Or something like that.

Tinder hasn’t stopped innovating, though, and is expected to launch Tinder Platinum in Q4. It will add new features including “message before matching” and “priority likes.” Based on Tinder’s track record,

Platinum will likely attract a nice combination of upgrades and new subscribers.

It would take too long to discuss each of Tinder’s features, but video deserves a special mention. Tinder launched it during the pandemic, and it’s been a big bit. Relationships seem to accelerate faster using this channel, so Tinder expects this to be sticky post-pandemic.

Subscription Businesses Are Where It’s At

Speaking of sticky, subscription businesses are an excellent place to put your money because they are sticky.

And I think Tinder is even more sticky than the average subscription. Unless a user gets into a relationship – most of which don’t last forever – it’s tough to cancel a Tinder subscription. It can’t be stated enough: With love always right around the corner, it’s hard to abandon Tinder.

A Good Match for Your Portfolio

Tinder is the type of app that can grow at a high rate for longer than you expect. Double-digit revenue growth deep into the 2020s is very possible.

Match Group has already gone up a lot over the past 3-4 years, and shares are trading at a lofty 14.7x forward sales, but getting exposure to the growth machine that is Tinder is well worth it.