Why is Match Group a good dating stock?

The S&P 500 Swipes Right On Match Group

Match Group has been confirmed as the latest Wall Street darling to be added to the S&P 500, but what does this mean for investors?

If being listed on the U.S. stock markets were Division 1 college football, then joining the S&P 500 is like joining the NFL.

And it looks like Match Group has just been drafted…

What does this mean for investors?

Joining the S&P 500 is no small feat. There is a very strict set of criteria, as well as some ambiguous targets. These include but are not limited to things like:

  • The company having a market capitalization of at least $13.8 billion.
  • The company is highly liquid.
  • Having a public float of at least 10% of its shares outstanding.
  • The company has spent a year or more in profitability.

Match Group, valued at $40 billion as of Friday’s close, meets all of these criteria and will be replacing Perrigo Company in this exclusive club.

How does this affect investors? Must be a big deal if its stock is up 10% after-hours?

Yes and no. 

While inclusion itself is an important milestone for Match Group, it doesn’t technically create any intrinsic value for the company itself. However, the prestige that comes with it is very valuable indeed, as it gives the Tinder-owner greater access to capital markets as well as cheaper debt, if needed, due to its membership status. 

The stock price is likely to receive an initial boost, as well as some greater stability in the long term. This is due to S&P 500-tracking funds now having to purchase large stakes in Match Group. 

If you’re a long-term MTCH investor, there’s really nothing you need to be concerned about. You can simply continue to sit back and let your investment grow.

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