Like Bees to Honey, Internet Dating Sites Attract Love-Struck Investors

Like Bees to Honey, Internet Dating Sites Attract Love-Struck Investors

When Facebook (NASDAQ: FB) was just a gleam in Mark Zuckerberg’s eye and long before Twitter began to tweet, online dating websites were the social media platforms du jour. This $2 billion a year business has been going strong since the early 1990’s and shows no sign of slowing down. In fact, an unprecedented number of Americans today use the Internet to find love. 43 percent of singles over the age of 18 have browsed online dating websites. Nearly one third of those singles say that they have dated someone whom they have met online. This translates into 40 million active account users with over 600 million visits to such websites per month. Once considered a shameful secret, meeting someone online is now an accepted part of today’s dating strategy. According to the Nielsen research firm, Internet dating is a booming business, up from $900 million in 2007 to $2 billion dollars today. No longer do you need to go to your local watering hole or hire a matchmaker. You now have the Internet.

IAC/InterActiveCorp (NASDAQ: IACI), the owner of Match.com (the largest online dating service) released 2012 fourth quarter earnings in early February. The company reported a profit of $40.7 million, down from $48.8 million, a year earlier. On the other hand, total revenue grew 28 percent to $765.3 million, beating analysts’ expectations.  The company’s dating sites Match.com and OkCupid.com improved revenue by 16 percent to $182.6 million. Match.com and Chemistry.com raised the number of paid subscribers to 1.8 million which translates into an 8 percent increase compared to the same quarter in 2011. IACI has a market cap of $3.70 billion and is currently trading at $41.87. P/E ratio is 22.76 with EPS of $1.84. The company currently has a dividend yield of 2.30 percent. IACI has a beta of 0.47 marking it as a low volatile risk for the less adventurous investor.

Online dating is so popular in China that the country has over three times the registered subscribers that U.S. online services have. While 40 million Americans are looking for love online, over 120 million Chinese are doing the same. In fact, Chinese company Jiayuan.com (NASDAQ: DATE) is so trendy that the name Jiayuan is synonymous with dating in China. The company reported net revenues for the third quarter 2012 of $18.1 million, a year-over-year increase of 24.8 percent. Net income for the same quarter was $2.5 million, down 35.9 percent from the same quarter in 2011. Before you clutch your collective chests in dismay, the company is set to grow revenues this year and community sentiment is bullish right now. Jiayuan has a market cap of $173 million and is trading at $5.47 which is the midpoint of its 52 week range. The company has a P/E ratio of 27.35 and a forward P/E of 23.87. EPS comes in at $0.20.  

As a sign of the times, online dating has gone mobile. In fact, mobile revenue for dating sites is expected to double over the next five years from $251.2 million in 2013. Match.com and OkCupid’s apps currently account for half of all users globally. So if you’re looking to invest in love as the month of February fades, take a look at online dating stocks. There are small-cap options that just might hit your portfolio like Cupid’s arrow. Ah, love.