Why Match Group Stock jumped on Thursday

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What happened

Actions of Match group (NASDAQ: MTCH) rose sharply on Thursday, jumping to 14.4%. As of 2:17 p.m. EDT, the stock was up 9.7%.

The leader in online dating will directly benefit from a revolutionary decision by Alphabet‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google Play Store.

So what

In a post on the Android Developer Blog, Google announced that effective January 1, 2022, the company will reduce the service fee it charges for all third-party subscription apps on the Google Play Store to 15%. Subscription apps were historically billed a 30% commission in the first year, then 15% each following year. Additionally, Google charged 15% on the first million dollars in revenue.

Image source: Getty Images.

Match Group offers a number of dating apps including Tinder, Hinge, OKCupid and its namesake Match.com, among others. Many consumers download the company’s dating apps through the Google Play Store and Apple‘s (NASDAQ: AAPL) App Store, the company paying a discount for each person who signs up, which has a big impact on the bottom line of the process.

There has been a heated debate in recent years about the fees charged by app stores at the expense of developers. Apple and Google have both faced growing criticism and allegations of monopoly practices over what many see as sky-high fees.

Now what

Match Group doesn’t usually reveal how much it pays tech giants, but in an interview with The Wall Street Journal Last month CFO Gary Swidler said he plans to shell out around $ 500 million this year in app store commissions, making it the company’s biggest expense.

For context, Match Group generated operating profit of around $ 554 million last year, so this could lead to a significant increase in company profits.

It’s important to note that the decision does not affect Match Group’s business deal with Apple, so the exact amount of the benefit is still a mystery. Still, given the scale of the cost to Match, investors are celebrating the move.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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