Nov. 19, 4:00 p.m. Update: The Match.com stock price closed at $14.74, a 18.58% gain from its IPO price of $12.00 in its first day of trading.
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The Match.com stock price opened at $13.50 today (Thursday) in its trading debut. That means investors who got in on the IPO price of $12 received an immediate 11% gain.
More than 10 million shares traded hands by noon today. The MTCH stock price had a range of $12.63 to $14 in early trading.
Through the IPO, the company raised $396 million by selling 33 million shares. The company has a valuation of $2.9 billion.
The Match Group Inc. (Nasdaq: MTCH) IPO was one of the most anticipated IPOs of 2015 because of the profitable online dating industry. According to Financial Times, the online dating industry is now worth roughly $2 billion. Match Group operates in large and niche markets alike, ranging from the 50-plus market with OurTime to the international market with the European dating site Meetic.
The Match Group's dominance in the market allowed it to grow profits 39% from 2012 to 2014. In 2014, Match reported a profit of $148.3 million on $888 million in revenue.
But there are two huge factors that will influence the Match.com stock price moving forward after the Match.com IPO...
The Two Biggest Influences on the Match.com Stock Price
The first factor is Match.com establishing its independence from IAC/InterActiveCorp (Nasdaq: IACI).
You see, the Match Group acquired 25 different brands in the last six years. These acquisitions weren't cheap, costing IAC a total of $1.3 billion.
For investors, this means that Match Group won't be able to use its IPO revenue as working capital. And that could have a major impact on the Match.com stock price...
Even though MTCH is a spin-off, its former parent company still has a major hand in Match's operations. In fact, IAC will still own 86% of the new company after shares are sold to the public. That leaves IAC with 98% of all voting rights.
Money Morning Capital Wave Strategist Shah Gilani went as far as to call IAC the "overlords" of Match Group....
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"Owning stock in a supposedly independent company that's anything but independent doesn't thrill me," Gilani stated. "That's especially true when the overlord of the property is Barry Diller, who moves around companies like he's playing corporate chess."
The second biggest influence on the Match.com stock price will be Match's ability to convert more users into paying subscribers.
Right now, only 7.9% of Match's 59 million active monthly users are paying for services...
Instead of offering suggestions on how it would attract more users, Match has a history of just acquiring rival companies. In 2010, the Match Group sent a letter to rival PlentyOfFish stating its stats were either untruthful or misleading. Match also made a site meant for direct competition, DowntoEarth.com, which was a complete flop.
So how did Match improve their services to compete with PlentyOfFish? They didn't. The Match Group purchased PlentyOfFish for $575 million in 2015.
You see, Match.com will eventually run out of companies to buy. And even if they wanted to buy more, it's unlikely to happen with the Match Group owing IAC billions of dollars.
Although the industry is booming, the Match Group will have to pay down its debt and focus on adding more subscribers before MTCH stock is worth owning.
Jack Delaney is an Associate Editor for Money Morning. You can follow him on Twitter and follow Money Morning on Facebook.