The Business of Love and Money and Online Dating
Erin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
They are man's two basic desires- love and money.
One of the first things man did was look for a spouse. In all societies, across all of time, no individual was complete without a partner. It was only a matter of time until man figured out how to combine his two pursuits. While many have attempted to make money and let it bring you love (and failed), the golden opportunity today is to make money off of other's (and your own) pursuit of love.
Man used to need a watering hole to meet a woman. Then he needed a matchmaker. Now he has the internet. According to Match.com, 17% of couples married in the last 3 years, met on an online dating site. Online dating has doubled in size and revenues in the past five years. Nearly forty million individuals are looking for love online this year, up from twenty million in 2007, according to Match.com. In fact, the online business of love and dating has become a nearly two billion dollar industry, up from $900 million in 2007.
People looking to invest in love, or maybe just to make money off of those looking for love, have several options available. Some of the most popular and largest online dating sites, Match.com and Chemistry.com, belong to InterActive Corp (NASDAQ: IACI). IAC controls about 20% of the online dating market, with other holdings such as BlackPeopleMeet.com and SeniorPeopleMeet.com. But IAC is not specifically in the love matching business. It is an internet properties business that also owns Ask.com, Dictionary.com, and UrbanSpoon, just to name a few.
The company saw 26% growth in revenue from FY 2010 ($1.6B) to FY 2011 ($2B). The stock is currently trading at its 52 week high ($50.90), up significantly from its low one year ago of $29.96. The company began offering a cash dividend of 1% in November 2011. IAC earned $105.2 million in the fourth quarter of 2011. That's not too shabby for a company offering a non-tangible service and product.
Spark Networks (NYSEMKT: LOV) is also making money bringing couples together. Spark operates multiple niche dating websites, and online dating websites, as compared to IAC. Properties include ChristianMingle.com, SingleParentsMingle.com and Jdate.com. While considerably smaller than IAC, Spark has reported 30% growth in subscribers, and an increase of 27% in revenue for the fourth quarter. Full year 2011 revenue was $48.5 million, a 19% increase compared to $40.9 million for full year 2010.
While forty million Americans are looking for love online, China has 120 million potential dates searching the internet. Jiayuan.com (NASDAQ: DATE) is so popular in China that its name is synonymous with dating. However, good in love doesn't always mean good with money. Like so many other Chinese internet sites, the company has seen its stock take a nose dive in recent months. Jiayan only went public in May 2011, and opened at $11. It is currently trading at $5.41 as of the opening bell today.
Jiayuan announced net revenues for the 2011 fourth quarter of $14.1M, representing a YOY increase of 53.6%. Net revenues increased 97.7% to $52.6M. While the numbers sound good, and the site might find you a mate in China, be sure to fully understand what is happening with Internet properties out of China before investing there.
If it is a date that you seek, try Match.com. If it is love and marriage that you seek, eHarmony is the site boasting the most marriages per subscriber. If it is money that you seek, invest in IAC or Spark.
Motley Fool newsletter services recommend Jiayuan.com International. The Motley Fool has no positions in the stocks mentioned above. ErinAnnie has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.