Major dating apps are heartbroken. It appears that the honeymoon with investors is over. Two examples illustrate this break. The first is Bumble, which promises to give women more power in digital collaboration and requires women to initiate conversations on the app. The US app’s breakthrough moment culminated in February 2021 when it began trading on the Nasdaq. The company’s initial public offering (IPO) had a strong debut, with shares soaring 85% on the first day, from $43 to $78.89. But the stock has since taken a nosedive, dropping 57% this year and now trading at just $6.33. The second is a match group where a similar situation played out. Since its IPO in 2015, Match Group, a leader in the dating industry that owns platforms such as Tinder and Match.com, hit its all-time high in December 2021, but the stock has since fallen 79%.
Why are investors cashing out their stocks in these companies? Various reports have accused the platforms themselves of raising in-app prices to increase revenue. But in reality, things are more complicated. Tinder prices range from $3.99 to $499.
“That’s not a lot of money, so perhaps the app’s struggles stem from other issues. “I’m not paying a penny to cheat,” said Paula Garcia, 26. She has had a Tinder account since she was 18 and has used it to “catch” several stable relationships over the past two years. “It’s like a catalog. You’re promoting yourself through the menu. It’s like going to the butcher’s shop; until you try the product, you don’t know if it’s worth the trouble. ”
Garcia likes Bumble primarily because it gives women more control and also offers nerve-racking questions like, “What are your dreams for life?” However, she is frustrated that users have to pay for increased visibility. “It’s irrational. If you’re not attractive, it’s useless. You’re not going to get anyone. Find another strategy, like making it interesting,” she says. It can be overwhelming to have so many options. In just one week, she received 999 matches. All of these were generated by algorithms. “It can be suffocating,” she admits. A similar pattern occurs on Tinder, where 84% of users are men.
“Gen Z is hesitant to pay for digital dating, mainly because they are younger and still visit places frequently.” [like bars or schools]It’s easy to meet people in person,” says Jess Calvino, a sociologist who studied at UCLA. Calvino suggests that as they get older, they will become more invested in online dating. But the bigger challenge may be the diversity of this generation, which requires careful market segmentation to connect them.
Garcia, for example, foresees a future in which his colleagues will become “disillusioned.” In her mind, turning 30 means being single and meeting fewer people and starting a lonely decade. “Young people don’t want to commit,” she says. “Children? It’s still taboo.”
Differences in expectations in the dating world have led to a proliferation of niche apps, each catering to specific needs. For example, people seeking “open relationships” often gravitate to platforms like Feeld, while single parents turn to Stir, and people of color turn to BLK and Chispa. All of these platforms are owned by Match Group. According to a report by US bank Jefferies, Match Group’s economic goal is to create a platform that balances the demographic ecosystem, including men, women, and different age groups, and provides the right match for everyone. It is said that it is about building.
Grindr, a platform geared toward the gay community, has grown by deeply connecting with a niche market. From January to June of this year, Grindr’s revenue surged 34% to $117 million, and its gross operating profit increased 40% to $68.5 million thanks to more than 14 million active users. did.
competitive space
Bumble, on the other hand, has struggled to maintain its position in an increasingly competitive market despite a 17.67% increase in paid users over the past year. The company recently cut 30% of its workforce. Analysts at Jefferies have grown more skeptical, cutting their earnings estimates and expressing concern about Bumble’s ability to reignite growth. Bank of America experts on August 8 highlighted the company’s sluggish sales growth, pointing out that the company’s sales rose just 3% in the April-June period compared to the same period last year. They are conservatively projecting sales this year of $1 billion, an increase of just 1%. Similarly, Match Group’s performance is not as strong. Revenue for the quarter rose just 4% to $3.5 billion.
Despite the challenges, Bumble CEO Lydiaan Jones expressed optimism in an email to EL PAÍS. Love, friendship, and community. ”
However, the real test is in the execution. For example, Match Group’s Hinge provides users with a list of recommended profiles, but it costs $3.99 to “rose” to show strong interest before starting a conversation. This strategy has proven effective, and Hinge now boasts 1.5 million paid users, a 55% increase from two years ago.
The winners in the digital dating race will be the apps that strike the right balance between price and the “quality” of potential matches, while avoiding a sharp drop in user engagement. In the second quarter of this year, Tinder’s paid users increased to 250,000, after falling by 78,000 in the first quarter.
“We have reversed the negative trajectory and stopped the decline in users,” said Alvaro Romero, an analyst at Singular Bank. “However, we still have a long way to go to achieve sustainable growth. Innovation is essential and we must avoid over-monetizing the network.” Tinder’s paid users declined last quarter, but Hinge ‘s user base is increasing, indicating that these apps are increasingly cannibalizing each other’s audiences.
Still, Tinder maintains a unique position in the market. “People have weird concerns about dating apps: It’s like sitting at a bar and it takes time,” says a longtime user. “I deleted the app because it was past its heyday and I was bored with it.”
In 2022, Tinder boasted 75 million monthly active users, but its efforts to monetize its massive user base have led to disappointment. “It’s clear that there are downsides to technology. It’s very easy to misrepresent yourself when meeting people online, and it can be frustrating and even dangerous,” says Katie, an American psychotherapist. Gillis warns. She points out that some of her clients have traveled across the country only to find out their partner wasn’t who they claimed to be. This decrease in trust can impact the user experience across these platforms. In response, Bumble’s leadership team is prioritizing the health of its ecosystem and realigning its strategy to improve the customer experience, Romero explains.
return to the real world
“Of course dating apps produce dopamine!” says Gillis. “It makes me feel better when I get likes.” But there seems to be a growing trend back to the offline world. Tinder is starting to organize in-person meetups, but activities like cooking classes and running clubs offer great opportunities to connect with others. Everything seems to be cyclical. Some younger generations are turning to apps like Twine, which matches individuals based on non-physical attributes, and Flood, which facilitates offline interactions. Many people revisit real-life social interactions and express genuine interest by saying, “I like you.” ”
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