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Therefore, a popular free alternative to Tinder could cause Match's growth to grind to a halt. The social media empire might even eventually tether its dating features to Instagram and Messenger, which have a combined user base of over two billion MAUs.That's troubling, because Match already warned in its fourth-quarter earnings report in February that Tinder's subscription rate would decelerate, dropping from 544,000 in the fourth quarter to 222,000 to 225,000 net adds in the first quarter.

Let's take a closer look at Facebook's ambitions and Match's growth to find out.

Facebook's new dating profiles, which are optional, feature full-page profile photos like those found on Tinder.

That's a high growth rate for a stock that trades at 29 times this year's earnings and 23 times next year's earnings.

Facebook's entrance into the dating market represents a new threat to Match, but I think investors overreacted to the news, for two reasons.

I suspect people will try out Facebook's dating platform, but that doesn't mean they will ditch Tinder, and the recent privacy concerns about Facebook may dissuade people from using the new product as well.

At this point, a 22% sell-off on little more than a threat seems exaggerated.

-- which owns Tinder, Ok Cupid, and other dating platforms -- tumbled more than 25% after the announcement, indicating that investors believe Facebook has a shot at rendering its dating apps obsolete.

But are investors overreacting to Facebook's announcement?

If Facebook's plans pan out, it could leverage its 2.2 billion monthly active users (MAUs) to render smaller dating apps or sites obsolete.

Match's numbers are tiny compared to Facebook's massive social presence.


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