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Match Group (MTCH) – Facebook as my Tinder Investment Killer?

Posted by Matthias Knopf on May 2, 2018 4:42:27 PM
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In this article, I would like to share my experiences with the Match Group stock (MTCH) and reflect on my decision-making process and my emotional experiences with my MTCH shares. I think that the emotional level plays an important role in learning trading and investing and I would like to share my experience for learning purposes with you.

Note: The author reflects his personal opinion and experience from his own trading. This article does not reflect the opinion of Tradimo and is not financial advice.

Personally, I have been a long-time user of the dating app Tinder. Currently, the Dating App is the flagship of the Match Group and the growth driver of the company. "Dating made easy" could be said. Swipe left or right in our now fast-moving world and you have the opportunity to meet someone new.

On 2nd October 2017, I decided to buy MTCH. Let's go through the decision to buy this stock together.

Tinder

Tinder is the # 1 Dating App for Millennials. The technology-oriented target group loves the application and uses it heavily.

Tinder as Problem Solver

Where do I start best? I think first of the target group. Millennials are generally tech savvy, and use these technologies for their communication, information gathering and even marketing. In general, one could say that this generation is the "online generation" and uses everything connected with it.

With Tinder it is possible for our generation to easily make new contacts in any part of the world, to get to know people online relatively easy. I even go so far to say that it allows us to have mass dates and for that I do not have to leave my home at all.

So we completed Step 1. Tinder makes sense, because it allows me to make contacts and to date people, while also saving time and money. Money? Yeah sure, I do not have to invite 10 different women for a drink to figure out that will not work anyway ;).

Match Group (MTCH) in Numbers

The Match Group operates many dating and network portals, including Tinder is currently the most successful model and contributes much to the growth of the company.
  • From 2015 to 2017, Tinder users grew from 700,000 users to 3.1 million users.
  • Tinder is No. 1 app in 14 downloads in 14 countries.
  • The monetization of Tinder works. Tinder grows year after year and regularly surprises analysts.
    Traderfox Infobox
    Source: Traderfox
  • Tinder Plus, Tinder Gold and other add-ons work well.
  • Tinder grows 4 times faster than the strongest competitor.
  • The market offers further growth opportunities.

Step 2 in my process is also complete. Tinder is growing and will continue to grow in the future. Analysts are often wrong and positively surprised. So I want to buy the stock. What now? Continue to step 3.

The Chart of Match Group (MTCH)

One of my approaches to stock trading is the classic technical momentum approach (take a look at an introductory course on technical analysis). I want to buy breakouts, because I like strong stocks and only hold so long as my shares remain strong. So let's take a look at the chart.

MTCH Chart
Source: My own Trading Account - I use CapTrader and the TWS

What do you see in the chart? I turned back the time until my purchase and show you the picture of that time. Let's look at the chart (this is a video lesson on Japanese candlestick charts). MTCH is in an uptrend and I know growth has begun.

I recognize a sideways phase with no noteworthy breakouts (here a course on support, resistance and breakouts) up or down. BUT! It happens in September 2017. MTCH is breaking through with volume and is again establishing a very close consolidation. I stand on it. A strong sign for me.

Here's my plan: I want to buy MTCH if they break out on a new all-time high and place my order in the market. That will happen in October 2017 and I'm in the stock.

Step 3: The chart picture convinces me and I want to have this stock. I like market leaders.

Since then, Tinder continues to grow and I had no reason to quit ... But then came Facebook.

Facebook as the Destroyer of my Trade?

On 1.5.2018 Facebook announces that they want to launch a dating app on the market. Although Mark does not want Tinder to be a competitor, he wants to be on the road to long-term relationships, but the product itself serves the same market in my eyes.

As a result, MTCH loses 22% in a single day. Is my dream of multiplying my trading account over? After all, I was already 102% in the profit. Currently I am at 56% profit. So I have to think about the future scenarios for this trade.

This is where my emotions come into play. Watching 50% of your profit fade away can lead you to emotional choices, and even I was about to hit the exit button. But then I thought about it and tried to approach the subject objectively.

Currently, Facebook has launched nothing on the market. Tinder is THE market leader. Facebook has to prove to me first that they can compete with MTCH. As long as my growth scenario exists, I also want to stick with it.

It's not easy for me to keep the stock, but actually this loss is more of an opportunity for me to buy more shares at a cheaper price and I see no danger at the moment.

My Summary: MTCH is a Hold for me

I keep Tinder and stick to my strategy to buy market leaders in breakouts. I try to avoid emotional decisions and therefore stick to my stock.

I hope I was able to give you an insight into the decisions of a trader and you can take a few things with you. If you want to learn more about finance then just look at Tradimo's and many other world leading educators' courses or become a member of Tradimo Premium and learn to find these stocks yourself.

Credentials:

Match Group

Traderfox

Tradimo courses

Topics: Stocks, Learn To Trade

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