Predicting the future of online dating as an investor

Will Facebook make Match Group's stock a bad investment? 

This must be the question of the week. Since Mark Zuckerberg announced Facebook's decision to introduce an online dating and matchmaking feature, the shares of Match Group have tumbled by double-digits. Match Group is the owner of well-known dating applications such as Tinder and many others. The company has been on our radar for a few quarters, if not years. It is a very well-run company. Sales are growing, the company is profitable, it generates free cash flow and operates in a growing market. All the indicators one would want to see to conclude that the company has the characteristics of a good long-term opportunity. But then Facebook happened. What would an intelligent investor do?

Some will tell you Facebook will be the winner. A dating application within Facebook makes a lot of sense. It engages the younger population who are on the fence about staying active on Facebook. The company already knows a lot about the users which makes a dating app an instant success.

On the other hand, some others argue that people are already scared of sharing more about themselves with Facebook. And, no one in the dating age will just use one dating application. History tells us that all-purpose social media is not as effective and users will look for more niche and customized applications.

Which argument is correct?

What would an intelligent investor do in such a situation?

The reality is no one knows with certainty what will happen. At one point or another, on our path to becoming an intelligent investor, we need to accept that predicting the market is not possible yet. Future-telling based on past is not something we humans have mastered. Knowing that no one can predict the future, an intelligent investor looks into the data in the search of well-operated businesses in a growing market and uses the market fluctuations to pick up those shares at more affordable price ranges. In the case of Facebook vs. Match Group, you still need to come to the conclusion that regardless of price-fall, which company is better operated. Visit their respective Stock Cards to get to know these companies a bit better.

Stock Card Premium members received their exclusive investment pick of the week on Wednesday. Those members have access to Stock Card investment ideas and three Stock Card requests per month to discover and validate new investment ideas. We share a few growing investment portfolios with our premium members. Join us in the fun!

What else we've been talking about this week?
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Warren Buffett and Elon Musk may get into a Candy competition! On Saturday's annual Berkshire shareholder meeting, Warren Buffet and his partner, Charlie Munger, took a jab at Elon Musk's point of view re the importance of "moats" (commonly known as competitive advantages that are hard to replicate by others). Warren admitted that some moats are more susceptible to fast erosion in the age of technology but joked about Elon Musk not being able to compete Berkshire in a candy business. In response, Elon Musk took it to Twitter and declared he is starting a Candy business. At this point, looking at Elon Musk's attention span and attitude to running his companies, one might question his dedication to create value for shareholders. Your reasons for holding onto your Tesla stock should not be about investing in well-run companies anymore, but rather just because you like Elon Musk and what he says and does. Let's just be honest with ourselves. If Tesla succeeds, it will only be a cherry on top of the cake. 

Apple has purchased 100 Billion dollars worth of its own stock. Such action comes across as if Apple is running out of good ideas and cannot find a better way to use its cash. With that cash, except 47 companies, it could have bought every other company on earth. In the short-term, the move is going to make a great return for the current shareholders. At the same time, Apple still has a lot of cash left to allocate to its future growth initiatives. One can conclude that things are not as gloomy as the media makes it sound.

Let's wrap it up for today by welcoming several new Stock Card Free and Premium plan members. We sure hope you are as thrilled as we are, about joining our community. Spread the joy by forwarding this email to your friends.

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