Jiayuan Stock Symbol: DATE
Jiayuan IPO date: May?
The online dating market in China is expected to grow from $75 million in 2010 to $292 million by 2015, according to data from iResearch. That’s good for a compound annual growth rate of 31.3 percent, and Jiayuan.com is positioning itself to take the lion’s share of that cash. In light of the company’s recent IPO filing, here are four reasons to consider adding Jiayuan stock to your portfolio:
1) Capturing the hearts of the Chinese. Jiayuan.com operates the single largest online dating site in China, according to iResearch. All told the site has 40.2 million registered users, 4.7 million of whom have logged in during the past calendar month as of March 31, 2011. Of that 4.7 million, more than 882,000 open their wallets every month to buy virtual “stamps” on the site (more on those stamps below).
2) Freemium model. Unlike most dating sites that only give registered users limited access to the site until they upgrade their account, Jiayuan lets anyone create a profile and browse other full profiles for free. Users can also send messages to anyone they please. There’s just one catch: if the message is the first one sent between two particular users, either the sender or the recipient must pay for a virtual “stamp” to make the message readable. After one stamp’s been purchased, those two users can converse via the site’s messaging platform for free. Stamps cost ¥2 (roughly $0.30).
“Given the nominal cost of a virtual stamp, we believe this feature of our business is recession-resistant and serves as a strong foundation of our revenue model,” the company writes in its F-1 filing.
3) No one said love is cheap. According to iResearch, Jiayuan gobbled up 43.7 percent of all the money spent on online dating in China last year. Numbers will likely be stronger this year, too, as the site expands to smaller cities across the country and hosts a growing number of face-to-face “VIP” events for the site’s more affluent users.
Revenue grew by 162 percent last year to ¥167.6 million ($25.4 million). Net losses widened last year to $1.3 million mostly on higher income tax expenses and income allocated to participating preferred shareholders. Jiayuan plans to use proceeds from the IPO to pay accrued dividends to preferred shareholders, which should help the company’s books moving forward.
4) Cultural shifts behind the Great Firewall. Jiayuan outlines several reasons for the expected surge in online dating in China, the most unusual of which is the “growing gender imbalance” in the country. China has the highest male-to-female ratio in the world at 1.133 to 1 (per Wikipedia). Compare that to the United States, which has a ratio of 1.05 to 1. Men may be drawn to online dating in an environment where its difficult to meet unattached women. Other cultural shifts in Jiayuan’s favor? Rapid urbanization and a fast-growing internet population. Just 14 million Chinese singles over 18 visited dating sites in 2009. According to iResearch, that number should exceed 60 million by 2015. Jiayuan’s hoping most of those visitors will come through its site (and hopefully buy a whole lot of virtual stamps in the process).
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Tags: DATE, Jiayuan IPO, Jiayuan.com
