What happened

Shares of Match Group Inc. (NASDAQ:MTCH) were getting dumped by investors today after Facebook (NASDAQ:FB) said it would launch its own online dating product. As Facebook is the dominant player in social media with more than 2 billion monthly active investors, Match investors were understandably worried that Facebook could pose a direct threat to it. As a result, shares of the online dating specialist were down 22.3% as of 3:14 p.m. EDT.

CEO Mark Zuckerberg speaks at a conference.

At Facebook's F8 Conference, CEO Mark Zuckerberg unveiled its new dating product. Image source: Facebook.

So what 

At Facebook's F8 Developer Conference, CEO Mark Zuckerberg said the social network will offer its first dating service, adding that such a product would seem like a natural fit for a company built on connecting people. "There are 200 million people on Facebook that list themselves as single, so clearly there's something to do here," he said. 

The prototype that Facebook demonstrated at the conference had a heart icon on the upper-right corner of the app that users can click on to build or access their dating profile. Facebook plans to leverage its knowledge of users' groups and interests in its dating service, as it will show what events you might like that are happening in your area, and then connect you to other online daters who might be interested in attending the same event. The service is expected to launch soon.

Now what

It's unclear what sort of impact this will have on Match Group, which owns Tinder, OkCupid, Match.com, and dozens of other online dating services. Facebook has poached users from rival sites by copying ideas before, most notably when it launched Stories for Instagram, luring away Snapchat users. But Match Group has its own advantages, such as network effects. The service already has millions of paying subscribers, and they are unlikely to just migrate away to another service.

Online daters often use multiple services at the same time, meaning even though the different services are competitors, they can still coexist. I suspect people will try out Facebook's dating platform, but that doesn't mean they will ditch Tinder, and the recent privacy concerns about Facebook may dissuade people from using the new product as well.

At this point, a 22% sell-off on little more than a threat seems exaggerated. Match Group is stronger than it's getting credit for.

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