Tinder owner Match Group Inc (NASDAQ:MTCH) has been hit with a downgrade by Jefferies analysts on declining usership of the dating app.
Jefferies bumped Match from a ‘Buy’ to a ‘Hold’ rating in a note and cut its share price target from $40 to $32.
Tinder had continued to face weak monthly active usership trends, Jefferies pointed out, adding planned verification requirements were unlikely to help.
User numbers dropped by three million to 47 million over the first quarter, with Jefferies citing a change in consumer preferences from swipe to prompt-based dating apps.
Though this should favour Match’s Hinge app, Jefferies warned the alternative remained “sub-scaled”, leading to a loss of paying users for the dating app operator.
“Investors and consumers alike have been disappointed by a lack of new features in recent years,” Jefferies continued.
“Tinder has finally announced new features including stronger verification, AI-based dating features, and even a new ‘double-dating’ feature.
“However, we are curious if the brand is beyond repair and if these features could be better off being used on Hinge.”
Tinder was likely to remain under pressure until Hinge became scaled and Match’s main driver of growth as a result, analysts added.
Shares fell 2.6% to $31.52 on Tuesday.