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Yes, There's A Way To Invest In Tinder

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Yes, There's A Way To Invest In Tinder
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Young adults might not be the only ones lusting over the recent launch of Tinder Plus. Earlier this week, Tinder launched an improved, premium version of its app called Tinder Plus, which had some exciting user features, as well as an interesting pricing model.

The two main features were:

  • Rewind: Re-swipe a person if a user accidentally swiped left or "passed" on them
  • Passport: Search for matches in other areas of the world based on geographic location

However, depending on users' age, they pay a different rate per month. Those between 18 and 29 years old pay $9.99 per month, while the 30-and-older crowd pays $19.99 per month.

Despite prices higher than expected, Axiom Senior Analyst Victor Anthony is bullish on Tinder's parent company IAC/InterActiveCorp (NASDAQ: IACI), rating it a Buy.

Related Link: Teenage Boys Aren't The Only Ones Bullish On Tinder

In an interview with Benzinga, Anthony mentioned his enthusiasm with pricing: "The higher price indicates to us that Tinder has seen very positive results from its price optimization testing. We are encouraged that the test results were solid enough to warrant pricing ahead of expectations."

These pricing effects weren't the only encouraging sign.

Anthony also cites many factors from a CNN interview with Tinder founder Sean Rad, such as:

  • International engagement doubled over past 90 days
  • Focus on markets such as Japan, India, Turkey while maintaining prominent locations such as Brazil, Canada, and U.K.
  • The core Tinder service will continue to be free

While these are exciting times for Tinder, IAC must also manage the cohesive use of both Tinder, along with its other dating service Match.com.

One Potential Issue

One potential issue Anthony sees in IAC is Tinder cannibalizing Match.com users. The other concern is whether Match.com's technology rebuild could be disruptive to Tinder, or even fall flat of expectations.

These issues, on a micro level, pale compared to Tinder's big question of monetization.

Anthony's estimates and price target of $80 don't factor in Tinder's monetization issue. He is still optimistic that a combination of advertising and recurring subscriptions will be cohesively beneficial to the monetization of users.

Another View

Other media analysts, such as Dan Kurnos of Benchmark, think Tinder Plus monetization will be a process of trial and error that may not gain traction until the second half of the year.

However, Kurnos thinks this may lead to an end product that could look much different than it does as of its launch on Monday.

On Tuesday, IAC shares fell 0.16 percent.

Image credit: Tinder

Latest Ratings for IACI

DateFirmActionFromTo
Jan 2016SusquehannaInitiates Coverage onPositive
Dec 2015BarclaysMaintainsOverweight
Dec 2015BarclaysMaintainsOverweight

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