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Facebook is a beast unlike any other that Match Group has seen (FB, MTCH)

Match Group, owner of Tinder and OKCupid among others, tumbled more than 22% on Tuesday after Facebook announced it will release its own dating app. Still, the dating app market may be large enough for two according to Jefferies.

  • Still, the dating-app market may be big enough for both players.

Tinder-parent Match Group tumbled 22% Tuesday, its largest one-day drop ever, after Facebook CEO Mark Zuckerberg, while speaking at the F8 developers conference, announced the social-media platform is planning to enter the dating-app sphere. The lack of detail around Facebook's upcoming dating app presents uncertainty and concern over whether the owner of OkCupid, Match.com and PlentyOfFish can keep up with the social-media giant.

Still, the dating-app market has yet to reach its saturation point and Jefferies analyst Brent Thill says, "Longer term we do believe the market is big enough for both players." He imagines a scenario in which Match Group might offer premium dating while Facebook releases a more casual offering.

"Ultimately we don't believe the impact will be catastrophic, but the increased uncertainty around FB's offering (timing, geo rollout, layout) creates a tough setup for MTCH near term," Thill wrote in a note where he downgraded Match to hold from buy and slashed his price target by 20% to $40 a share.

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Thill points out Match Group's scale and reach had always been its advantage in the dating-app market. However, that advantage will disappear once Facebook enters the industry as the social-media giant holds the resources to build a large scale product. With approximately 2 billion users internationally, Facebook is unlike any of Match Group's previous competitors.

Match Group shares are up 12.5% this year.

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