Dating Apps Have Hit a Wall. Can They Turn Things Around?

As online dating became as easy as swiping a finger across your phone screen, the companies who own apps like Tinder and Bumble became Wall Street darlings. But about a decade later, those platforms are now struggling to live up to expectations, and investors have grown frustrated and eager for something new.

Match Group and Bumble — which make up nearly the entire industry by market share — have lost more than $40 billion in market value since 2021. Even in an age when the apps are a staple on people’s smartphones, the two companies are laying off workers and reporting lackluster revenue growth.

Both companies have recently brought on leaders who have vowed to experiment with new features, hoping to capture the growth investors crave. But they face one critical obstacle: Not enough young people are willing to pay for subscriptions to dating apps — partly because younger daters are increasingly looking to platforms like Snapchat and TikTok to make connections — and it’s not clear what will change that.

Match Group and Bumble generate the bulk of their revenue — about $4.2 billion for both companies last year — by selling subscriptions, with smaller income streams from advertising. But they’re struggling to grow those sales. Match Group was able to keep revenues steady last year only by raising its prices.

As far as investors are concerned, the businesses need to convince more young users to pay.

“Wall Street loves subscription models because it gives them the comfort of recurring revenues,” said Youssef Squali, an analyst at Truist Securities.

By paying, users can unlock features like unlimited swipes and the ability to see who has swiped on them. But for many people, that’s not enough: Unlike other paid subscription services, like Spotify or Netflix, dating apps can’t guarantee that you’ll find what you’re looking for.

“It feels really different to pay for access to people,” said Kathryn D. Coduto, a Boston University professor who studies dating apps. “Paying for it makes it feel a little skeezy.”

In the United States, 30 percent of adults, and over half of adults under 30, use dating apps, according to a survey by Pew Research Center that was released last year. About a third of dating app users reported paying for them, with men and higher-income adults more likely to pay than others, the survey found.

Millennials, the nation’s largest generation, were prime dating age when Tinder first rolled out, but more and more of them have married in recent years, a decision that usually results in people quitting the apps. Now the primary users are from Gen Z, a younger — and smaller — demographic with less disposable income. That generational shift poses a challenge for the dating app industry.

Mandy Wang, an 18-year-old student at New York University, said she preferred to meet people in person or through a direct message on platforms like Instagram or Snapchat. Dating apps are for casual use, “like a game,” she said.

“People use dating apps, but I don’t know anyone who pays for it,” Ms. Wang said. In fact, she said that she would consider it an “ick” if she learned somebody was paying for a subscription.

Jess Carbino, a former sociologist for Tinder who is now a consultant and dating coach, said younger people “still feel a desire to use online dating apps, but they’re not necessarily experiencing a sense of urgency to find a partner.”

“I think what we’re seeing is purely a demographic shift,” Dr. Carbino said.

Match Group and Bumble declined to comment on their plans to draw in more paying users, pointing to public statements made by their executives.

Bumble’s chief executive, Lidiane Jones, told analysts last month that the company would be revamping the app to appeal to more users, particularly younger ones, by adding “personalization and flexibility” to the experience.

Bumble’s larger competitor, Match Group, was an early player in the online dating market, starting with Match.com in 1995. The company acquired Tinder in 2017 and Hinge in 2018, kicking off a period of growth that caught investors’ attention.

Tinder is the largest brand in Match Group’s portfolio and the most popular dating app in the United States. It shook up the industry landscape in 2012 when it introduced a swipe feature, which is now ubiquitous in dating apps. But the swipe’s novelty has worn off, and Tinder has lost momentum. The number of paid users on the app was down nearly 10 percent in 2023.

Tinder’s struggles, and those of the broader dating app industry, are in part because the format is substantially the same as it has been for more than a decade, said Zach Morrissey, an analyst at Wolfe Research, a financial research firm. But the way people date may have shifted.

“This is a space where product innovation has been relatively muted in recent years,” he said.

That’s starting to hurt. Bumble, which went public in 2021, initially jumped in value but after a steady slide its stock is now about a quarter of its I.P.O. price. Match Group’s stock price reached a high of $169 in 2021. It now sits at $34, about a fifth of its peak value.

Match Group and Bumble have made some changes recently to convince investors that they can spin things around, but it’s unclear what will solve their problems. “There’s not an obvious silver bullet that they need to address,” Mr. Morrissey said.

Both companies have had some leadership shake-ups: In January, Ms. Jones joined Bumble, and Match Group promoted Faye Iosotaluno, the former chief operating officer of Tinder, to be the app’s chief executive.

Bumble announced last month that the company was laying off about a third of its work force in the first half of this year. It also lowered its revenue forecast for the first quarter, below Wall Street expectations.

“The demand for connection and love continues to be really strong — two billion single people around the globe,” Ms. Jones told analysts in February. “Yet the products that are bearing the set of experiences to create those connections are not serving users the way that they want to.”

Match Group’s chief executive, Bernard Kim, told analysts in a Jan. 31 earnings call that this year Tinder was “adopting a fast-fail mentality, a strategy that prioritizes rapid experimentation and testing.” Mr. Kim took over the company in 2022 after previously serving as president of Zynga, the maker of mobile games like Farmville.

He said that the company would attract more paying users through marketing and that it was adjusting its products in various ways, including introducing new à la carte premium features.

Match Group has also expanded its offerings, like a service for L.G.B.T.Q. dating, called Archer, and one marketed toward Latinos, called Chispa. Revenue from those products was down 4 percent in 2023.

Mr. Kim said that Tinder was reimagining the swipe feature altogether and would be rolling out new functions this year. The platform is also pushing for more users to get verified, a move that’s aimed at improving safety and helping women feel more comfortable using the app.

The activist investor Elliott Management, which previously led shake-ups at Salesforce and Pinterest, took a $1 billion stake in Match Group in January, a sign that Wall Street sees an opportunity for growth.

Elliott declined to comment on its discussions with Match Group. Mr. Kim told analysts that he and the firm had “collaborative dialogue.”

Despite the challenges, the dating industry isn’t going anywhere, said Ken Gawrelski, an analyst at Wells Fargo.

“Dating, overall, and love, more generally, is a core human behavior,” he said. “So it’s hard to believe that changes materially. But the way we date, or the way we find matches, is very much an issue in this discussion.”