Investors swiping right on Tinder
Investors and analysts are swiping right when it comes to Barry Diller’s IAC and its Tinder app.
Tinder is the hot dating app that shows you other users in your location; you swipe right for a match or left if you have no interest.
The app now manages more than a billion “swipes” a day and is poised to skyrocket in usage over the next year, a new analysis from Barclays shows.
The app is growing at such a rate that Barclays predicts its valuation will reach $1.1 billion by this time next year, adding to IAC’s current $5.7 billion market cap.
Barclays upgraded IAC stock to overweight from equal weight on Thursday and raised its price target to $87 from $72. Shares of IAC were trading at $72.69 on Friday.
They have risen 44 percent over the last 12 months, handily outperforming the broader S&P 500, which is up 21.3 percent.
The growth in Tinder, a part of IAC’s Match dating business segment, has been explosive over the last year as millennials look for alternative, less committal ways to date.
In February, the company boasted 750 million swipes per day, up from just 5 million in December. Today, it manages more than a billion swipes resulting in some 12 million “matches” each day.
Barclays expects Tinder global daily active users to reach 20 million by April — 40 million on a monthly active user basis. It also expects IAC to start prepping the app for monetization, estimating that Tinder could generate as much as $180 million in revenue in 2015.
“It’s growing very, very fast and the monetization opportunity is enormous,” Barclays analyst Chris Merwin said in an interview with MarketWatch.
With Tinder and Match, IAC is looking to own the digital personal ad space, extending its services from teens, who might not previously have been eager to sign up for an online dating site, to the elderly.
“IAC is monetizing daters across all ages across all demographics,” Merwin said. “They want to create the best portfolio of brands in online personals.”
The idea, he says, is that Tinder will bring on young casual daters, who then get used to the online dating experience and eventually transform into Match users. That is, of course, if they haven’t already found their soulmate on Tinder.
Merwin is also bullish on the growth of IAC’s video-sharing service Vimeo, predicting that subscriber growth helps drive a 73 percent year-over-year jump in Vimeo revenue in 2015 to $108 million, valuing the niche sharing site at $540 million.
Together, at those growth rates, Tinder and Vimeo would add a combined $1.64 billion to IAC’s revenue next year. IAC boasted 2013 sales of $3.02 billion.