Proof investors still have a ton of faith in Facebook
Facebook (FB) announced a lot of new features and changes at its annual F8 developer conference on Tuesday. But one announcement hogged most of the public’s attention: Facebook will offer an online dating feature.
The second that CEO Mark Zuckerberg announced this plan, Match Group (MTCH) stock fell off a cliff. Shares of the parent company of Match.com, OkCupid, and Tinder plummeted by about 20% before the day was out.
It’s a reminder of just how much Wall Street investors believe in Facebook, and how little their faith has been damaged by the Cambridge Analytica privacy scandal. (Facebook stock bounced back after Zuckerberg testified in front of Congress, and is up 2.3% since the data scandal broke in March.) The thinking appears to be that if Facebook so much as waves its hand in the direction of an industry, everyone else in that industry better be scared.
Remind you of any other company? Amazon has the same effect on the biggest publicly traded companies. When Amazon announces it wants to dip a toe into a new business, shares of rivals in that business fall.
The irony to this is that from a user perspective, you might think online dating is just the kind of service that people might be hesitant to trust Facebook with, amidst its PR nightmare over handling of users’ personal data. What if matches, and flirty messages, were to leak?
There’s also an argument to be made that individual dating apps like Tinder and Bumble, which are hot and, for now, exist only for dating, have nothing to fear from Facebook because they have credibility right now and are unlikely to get ditched by people just because Facebook will now have a dating feature.
And finally, Match Group is the king of the online dating space. It acquires almost every small competitor that gains steam. It owns a lot more than just Match, OkCupid, and Tinder, including HowAboutWe, PlentyOfFish, Meetic, and OurTime. It stands to reason that it has some experience in the space, while Facebook doesn’t, and that Facebook jumping in shouldn’t mean Match has anything to fear right away.
Wall Street doesn’t feel that way. As Hilary Fordwich, founder of strategy firm Strelmark, told Fox Business on Tuesday, “The mass user doesn’t really know all the details, certainly not of Cambridge Analytica… I think this is the McDonald’s of dating and I think it’s going to go very well for Facebook.”
Despite the instant stock reaction in the form of a Match selloff, it’s worth remembering that Facebook has not always followed through on new apps or services it announces at its big glitzy launch events.
In 2016, Facebook announced a new feature called Sports Stadium, “a place devoted to sports so you can get the feeling you’re watching the game with your friends even when you aren’t together.” The feature did not catch on, and Facebook never touted it again. To even find it, users must tap the menu on the Facebook mobile app at the bottom right, then scroll all the way down, then tap “See more,” then tap Sports.
In 2017, Facebook doubled down on chat bots inside the Messenger app, and Messenger chief David Marcus declared that with the chat bots, “We have a shot at becoming the Yellow Pages of messaging.” That has not happened. (Messenger has 1.3 billion users and Facebook says there are 300,000 chat bots on Messenger, but it does not share how many users are actually engaging with chat bots.)
Zuckerberg did specify that Facebook’s dating app will only display first names, will not be connected to Messenger or WhatsApp, and will be visible only to other people using the app, not to your Facebook friends.
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Daniel Roberts covers tech and media at Yahoo Finance. Follow him on Twitter at @readDanwrite.
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