StashLearn
Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Life

Snap, Swipe, and Chill: The Business of Online Dating

September 25, 2018

Learn how connecting people online is a lucrative business.

5 min read

Love, actually, is all around us. And that means there are ample business opportunities for companies that facilitate connections, like online dating apps and websites.

The online dating business

The world of online dating and mobile dating apps is expansive and diverse. There are sites and apps, for example, designed and targeted at singles who strictly want to date others that share their religious beliefs (Christian Mingle, Jdate), their occupations (FarmersOnly), or ethnic background (BlackPeopleMeet).

There are even platforms out there for people who are already in a relationship and looking for some side action (Ashley Madison) or no-strings-attached fun.

In all, as much as 40% of Americans use these platforms—though not everyone uses it strictly hoping to make a connection. Some people report using them out of boredom, or plain old curiosity.

And while the world of online dating may seem like a young man’s (and woman’s) game, it’s being embraced by people of all ages, according to data from Pew Research Center.

Source: Pew Research Center, 2016

There are dozens of platforms out there, too. Some involve users swiping their finger across a screen to signify their approval of potential matches. Others use intricate algorithms to create a list of potential matches. And others have users fill out questionnaires and surveys to create match profiles.

But there are a few clear favorites among the U.S. consumer base, with Tinder leading the way, according to consumer survey data.

Source: PiperJaffray, 2018

Turning swipes into dollars

Need proof that love is a lucrative industry? Just look at Valentine’s Day as an example. In 2018, U.S. consumers spent nearly $20 billion on candy, flowers, and other Valentine’s Day gifts for their significant others, according to industry data. And the average date night—including dinner and drinks for two, plus a couple of movie tickets—costs $102.32, according to survey data conducted by Match.com

How much it costs to take someone out, however, can vary wildly depending on where you live.

Source: Match.com, 2018

With so much cash up for grabs, it’s no wonder that entire industries have formed in order to help people connect. Romantic dinners, romantic comedies, Whitman’s samplers, and even online dating profiles—they’re all designed to be purchased, in droves, by the lovestruck.

Getting people to sign up and use a digital dating platform isn’t all that tricky. People need to eat, sleep, and almost all of them are going to seek out a mate at some point—mobile apps and websites make the process easier.

For that reason, digital dating platforms—though they had a sense of social stigma, that they have since shed—are incredibly popular. And profitable.

Tinder, for example, drove $400 million in revenue in 2017 to lead the industry. And one of its chief competitors, Bumble, has seen downloads grow 570% over the past two years, according to reports.

While revenue and growth like that sound extraordinary, it may not last, especially if more companies continue to crowd into the sector. The industry also faces significant risks from tech companies with deep pockets, such as Facebook, which is developing its own dating app. And like any other industry, user growth may slow as it reaches maturity.

Love letters and dollar signs

Just how big is the online dating industry? It’s hard to say for certain.

That’s partly because it’s hard to get a sense of exactly how many people are using online dating platforms because there are several on the market, many of which don’t release data about their user counts.

But we do have some snippets of data.

For example, one dating app, Badoo, boasts a user count of 370 million worldwide. Bumble has roughly 30 million users, and Tinder has more than 50 million.

But not only are there tens, and in some cases, hundreds of millions of people using digital dating platforms, but these users are also very engaged. The average user can spend up to 90 minutes per day swiping, scrolling, and sending messages, according to industry data.

That all translates into revenue for the companies that run the platforms. Overall, the dating services and digital connection industry is a roughly $3 billion market and is expected to grow around 5% annually over the next two years.

Clipping Cupid’s wings?

Though the online dating business is becoming more established, that doesn’t mean that the dominant industry players—Tinder, Match, eHarmony, etc—are in the clear. Other large companies are starting to take notice, and elbow their way into the space.

Social media behemoth Facebook, for example, announced that it would add a dating feature to its platform in August. While we don’t know how many users Facebook’s feature will ultimately attract, if it proves successful, other social media companies will likely follow suit.

So, the possibility exists that an outsider with substantial resources, like Facebook, could come in and shake up the entire market.

But there are also internal battles that could alter the growth and direction of the industry.

Bumble and Tinder are in a legal battle, for example, over profile-swiping features. And there are security concerns, too. A few years ago, a large-scale data breach involving cheating site Ashley Madison rocked the industry.

Love, actually…

Though the industry still has some kinks to work out, it’s hard to think that online dating will become less appealing with time. While online dating is still uncomfortable and unorthodox for some, younger generations aren’t just embracing it, they’re native to it.

Issues related to data security and competition aren’t likely to go away any time soon, however. And just because there’ll likely always be a market for digital matchmakers, doesn’t mean that the revenues are going to come easy.

With that said, there’s probably always going to be a buck to make by kindling relationships.

You can invest in the companies helping people connect on Stash.

Investing, simplified

Start today with as little as $5

Get the App

By Sam Becker

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
politics love and money budgeting pop culture market news
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.