Please ensure Javascript is enabled for purposes of website accessibility

Why IAC Shares Plunged Today

By Evan Niu, CFA - May 1, 2018 at 3:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Social networking giant Facebook is jumping into the dating game.

What happened

Shares of IAC (IAC) have plunged today, down by 13% as of 2:40 p.m. EDT, after Facebook (META 1.68%) announced new dating features for its core social network. IAC is the parent company of Match, which has a portfolio of online dating services including Tinder and OkCupid.

So what

Facebook announced the new features at its annual developer conference F8. Facebook will add a new section to the primary Facebook app for dating and interested users will need to opt-in to access the optional service. CEO Mark Zuckerberg said that the offering was designed "with privacy and safety in mind from the beginning," noting that Facebook friends won't see your dating profile and users will only be matched with people that are not currently their Facebook friends.

Woman smilling at her smartphone with hearts coming out of it

Image source: Getty Images.

The feature will only be available to those who list their relationship status on the platform as "single," suggesting that Facebook does not want to enable extramarital relations or accommodate users that may be in open or non-monogamous relationships. CEO Mark Zuckerberg said, "This is going to be for building real, long-term relationships -- not just for hookups."

Now what

With 2.2 billion monthly active users (MAUs) at last count, Facebook's network effects dwarf all other social networking sites, including dating services. Network effects are incredibly important to all social networks, but particularly dating sites. In contrast, Match had just over 7 million subscribers at the end of 2017, a rounding error compared to the behemoth that is stepping in to challenge it. That total includes approximately 3.9 million subscribers in North America and 3.2 million subscribers internationally.

Unlike many traditional dating sites that charge subscription fees, Facebook's primary service is free and supported with ads. Some of Match's properties include free tiers, including Tinder. Match posted average revenue per user (ARPU) of $0.55 in the fourth quarter. Facebook will provide more detailed information regarding its forthcoming dating service, such as when it will be released, later this year.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Match Group, Inc. Stock Quote
Match Group, Inc.
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
$163.38 (1.68%) $2.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.