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J.P. Morgan has pulled back on estimates for online dating stocks, expecting foreign exchange and macro headwinds to arrive for them just as they are for broader Internet names, but it’s staying positive on the category overall.
Dating stocks held up well during the 2007-2009 recession, analyst Cory Carpenter notes, and they’ll likely be more resilient in the current macro environment than other verticals, such as online ads and e-commerce.
Penetration of those services is somewhat higher now than in 2009, however, and they’re not immune to downturn. The firm is trimming top-line forecasts by less than 5% for the second half of 2022 and 2023 – and that mainly due to FX concerns.
The reality is that there isn’t a perfect precedent to look at,” Carpenter says. “Tinder, Bumble, & Hinge did not exist during the last recession, and these apps have a very different user profile than the Match.com user of ’08.
Bumble (NASDAQ:BMBL) should see less impact due to “geo exposure, smaller scale, user demographics, and more greenfield international growth opportunity,” he says, and Bumble remains the top SMID-cap idea in the space. Carpenter’s raised the price target to $39 from $34.
Meanwhile, Match.com (NASDAQ:MTCH) is likely to lower its 2022 revenue guidance to slightly below 15% thanks to FX headwinds – and Carpenter is cutting its revenue growth estimate to 12.5% for 2022. It’s staying Overweight on that stock but cutting the price target to $105 from $125.
On Bumble (BMBL), J.P. Morgan isn’t changing its net subscriber additions estimate (currently 150,000 in Q2, up from 135,000 in Q1, and 175,000 for Q3) so its estimate cuts are entirely due to FX and Badoo, Carpenter said.
Overall, the firm expects FX could mean an incremental headwind of about 200 basis points to Match’s (MTCH) prior guidance, and about 100-150 bps for Bumble (BMBL).
The stocks rose Tuesday along with a broad rally in Internet names: MTCH +8.2%, BMBL +3.3%.
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Image and article originally from seekingalpha.com. Read the original article here.