Short sellers target love
14 February 2012 London
Image: Shutterstock
Online dating providers with easily replicable business models and tenuous outcomes have attracted interest from short sellers, reports Data Explorers.
Just in time for Valentine’s Day, The Economist presented scientific research casting many of the claims of online dating into doubt. The heart of the matter, writes Data Explorers, is that "the choice offered by online dating can be overwhelming and in the end outcomes might not live up to expectations. It may come as no surprise that this hugely competitive industry has been targeted by short sellers".
The securities lending analytics firm identified that the running theme across the three listed online dating providers it looked at seems to be that companies exploit love seekers' differing attractions by making several versions of what is essentially the same site.
InterActiveCorp, operator of match.com and chemistry.com, has seen short interest grow steadily over the last year from six per cent of total shares to 14 per cent. FriendFinder Network, operator of friendfinder.com, has seen short interest grow steadily to 2.3 per cent, which represents nearly all of the available supply, and the company's shares have lost over two-thirds of their value since its IPO last year. Lastly, Spark Networks, operator of jdate.com, has relatively low short interest, with 1.2 per cent of shares on loan, but Data Explorers notes that this number has jumped in recent weeks on the back of a share price rally in the fourth quarter of 2011.
"Matters could be further exasperated should companies like Facebook or Google offer matchmaking services free to their existing communities," Data Explorers adds.
Just in time for Valentine’s Day, The Economist presented scientific research casting many of the claims of online dating into doubt. The heart of the matter, writes Data Explorers, is that "the choice offered by online dating can be overwhelming and in the end outcomes might not live up to expectations. It may come as no surprise that this hugely competitive industry has been targeted by short sellers".
The securities lending analytics firm identified that the running theme across the three listed online dating providers it looked at seems to be that companies exploit love seekers' differing attractions by making several versions of what is essentially the same site.
InterActiveCorp, operator of match.com and chemistry.com, has seen short interest grow steadily over the last year from six per cent of total shares to 14 per cent. FriendFinder Network, operator of friendfinder.com, has seen short interest grow steadily to 2.3 per cent, which represents nearly all of the available supply, and the company's shares have lost over two-thirds of their value since its IPO last year. Lastly, Spark Networks, operator of jdate.com, has relatively low short interest, with 1.2 per cent of shares on loan, but Data Explorers notes that this number has jumped in recent weeks on the back of a share price rally in the fourth quarter of 2011.
"Matters could be further exasperated should companies like Facebook or Google offer matchmaking services free to their existing communities," Data Explorers adds.
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