“We think the attractiveness of the platform comes from the selection and liquidity it is able to deliver because of its more mass-market prices,” Madhukar added.
The analyst did not adjust his price target of $54, representing 3 percent downside from Tuesday’s closing price. Shares of Match Group fell 4.3 percent Wednesday following the Deutsche note.
Any such slowdown could pose an issue for Match and CEO Mandy Ginsberg, who has often characterized Tinder as the company’s “growth engine.” Shares notched a closing high in September and have rallied nearly 60 percent over the past 12 months in part thanks to a premium subscription option introduced in 2017. Called Tinder Gold, the premium option allows paying members to see who has already “liked” their profiles without swiping.
More than 60 percent of the 4.1 million subscribers on Tinder were Gold subscribers as of the end of the third quarter, helping boost direct revenue on the app nearly 100 percent. Still, management has cautioned that the strong year-over-year performance won’t sustain itself indefinitely and that they are exploring how best to exploit the company’s pricing.
“As we have discussed previously, the comps do get tougher for us starting in the fourth quarter, since last year’s fourth quarter was the first full quarter with Tinder Gold,” Ginsberg said in November. “We do still have pricing power at Tinder. We’re still very early in dynamic pricing and testing price elasticity. We need to do that more on a country-by-country basis as well, since Tinder’s in pretty much every country in the world.”