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Inappropriate interview with Tinder executive director complicates the IPO of Match

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(CNNMoney) – A surprising interview with the executive director of Tinder represented a problem for his parent company's plans to be publicly traded.

Match Group, owner of Tinder, is ready to start its relations with Wall Street on Thursday, but its plans got complicated on Wednesday night due to an article published in the British Evening Standard.

The article included incorrect metrics about Tinder, and inadvertently lewd quotes attributed to Tinder's chief executive, Sean Rad. The interview raised questions about whether the company violated its "period of silence", the window between the presentation of a public document and the time that the SEC considers it effective. Companies are supposed to remain silent about the information it contains.

Match issued a new public statement Wednesday night in which it said that Rad's article and comments were not "endorsed or approved" by the company.

Match advised its potential shareholder to rely on the information contained in its brochure and not in the Evening Standard report. According to Match, Evening Standard incorrectly published that Tinder has 80 million users, when it actually has about 9.6 million.

Rad, who co-founded the Tinder dating application, is quoted as saying: “There seems to be a term for someone who is persuaded by things of an intellectual nature. You know, they just talk. Which is the word? "He wrinkles his face as he struggles to remember—" Could you say sodomy? "

The owner of the dating sites, between these Match.com and OkCupid, is scheduled to sell more than 33 million shares at $ 12 each. The sale price will increase 400 million dollars and the value of the company is approximately 2,800 million dollars.

Match, which will be publicly traded under the “MTCH” share symbol, is undoubtedly hoping to take advantage of the growing popularity of online dating among the millennium generation's youth. Over the past four years, the Match site has increased the number of active users by 63% per year, giving the company a total of almost 60 million.

At the "center" of this growth is Tinder, the popular, although controversial, application that has proliferated in the field of online dating. Tinder is famous for allowing users to slide their finger to the right if they like a possible future appointment and to the left if it is the opposite.

Lately, people who make appointments online have been sliding their finger countless times. Match said Tinder users slipped their finger through an incredible amount of 1.4 billion user profiles every September. But critics argue that Tinder promotes a culture of "dating someone" rather than establishing real relationships.

Unlike Square, Match is making money

Match's first date with Wall Street is more of a double date. It coincides with the high profile debut of Square, the mobile payment company started by Jack Dorsey, the CEO of Twitter. Square's public offering of sale (OPV) could end up valuing the company at a significant discount, compared to the value it previously had in private markets.

However, unlike Square, Match is already profitable. The company earned $ 85 million in the first three quarters of 2015 and its revenue increased 16% thanks to an increase in paying customers.

"Match has an incredible profitability profile," said Kathleen Smith, director of Renaissance Capital, which manages OPV-centric market tradable funds.

Does Tinder ‘cannibalize’ Match?

However, Smith said investors should be aware of the "erosion" that Match has experienced in paid subscription revenues. That key metric has decreased in each of the last three full years and is also falling so far in 2015.

These concerns have led some analysts to warn that Match is nothing more than problems for investors.

BTIG analyst Brandon Ross wrote in a research report that "the explosive growth of people making online appointments with free profiles, particularly Tinder, is cannibalizing the rest of the business."

He called this phenomenon "Tinder Catch-22", suggesting that subscription losses will continue in the commercial area of ​​Match not related to Tinder.

Smith believes that criticism does not give Match enough credit to develop Tinder internally.

“This is an administration team that can benefit from Tinder. They are not simply buying sites, ”he said.

Can Match avoid the fate of GoPro?

Match will be publicly traded at a time when investors have increased scrutiny of unconfirmed companies. The actions of a number of companies that recently began to be publicly traded faced significant declines, including Alibaba, Fitbit, Etsy and Shake Shack. The clearest example is GoPro, which fell last week below its OPV price.

Prior to its public sale offer, Match was part of IAC / Interactive (IACI), the conglomerate run by media mogul Barry Diller. IAC has previously led to a number of branded companies, including Expedia, TripAdvisor and HSN.

. (tagsToTranslate) Stock exchange (t) Match (t) Tinder



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