Tinder Dating App Value of $5 Billion Questioned
The technology world was skeptical about a recent news report from Bloomberg, concerning the purchase of shares in a popular dating site. Not only because the site, Tinder, was just twenty months in existence, but more to the fact that the purchase of the 10% stake in Tinder, gave it a valuation of US$ 5 billion dollars.
The buyer of the Tinder shares, IAC, reportedly paid US$ 500 million for a 10% share in the dating app company. IAC is ?an American internet company with over 50 brands across 40 countries headquartered in New York City (Wikipedia).
The big question, of course, is, if Tinder is worth that much money. The answer, according to IAC itself, is no.
Sam Yagan, the Chief Executive Officer of the Match Group, an IAC company that manages IAC’s online dating outfits, told Forbes Magazine that although the deal is real, ?this valuation is nowhere near the truth.?
Media attempts to get a confirmation from Tinder were met with silence.
Tech pundits themselves have called the US$ 5 billion dollar figure an ?insane number?. IBISWorld, a market research firm explains that the industry of online dating, in its entirety, is only worth approximately US$ 2 billion dollars. To value Tinder as reported, they added, would mean that Tinder has something else to offer, considering that the app is given away for free.
Analysts add that this does not mean that Tinder does not have any monetary potential. With an active daily user base of ten million, the app service has certainly been a game changer in the way people interact and behave.
Although I have not used the app myself, a number of users who have found special and valuable relationships via Tinder, swears by the ease and effectiveness that Tinder has over other dating apps and sites.
While other dating apps and sites lead you through the whole shebang of signing up and providing tons of information about yourself, Tinder requires zero effort.
With Tinder, you sign up with your Facebook account, search through the images of other Tinder users, and swipe left or right if you find the person ?cute? (swipe right) or not (swipe left). If you both swipe right to each others images, you can then chat with each other right away. If either one of you swipes left, then no contact is established.
What is nice about Tinder is that the other person was never notified about your interest (swiping right) and you will never know if the other person got to browse your image at all. This arrangement eliminates the fear of being rejected which is what many people roaming the ?dating jungle? dread most.
A consultant in the online dating industry, Mark Brooks, explains it well in saying that ?Tinder?s really doing something that has been the Holy Grail for online dating: it becomes fun.?
Analysts point out that other dating sites like Match.com and OKCupid have not been able to solve this ?rejection? problem. They have also been quite unsuccessful in simplifying the sign up process which is what Tinder has successfully done.
With all the positive features of Tinder, and its potential earnings, the question of its true value still remains up in the air. Many see the IAC purchase more, as a way to keep Tinder connected to their business empire, rather than a way to make immediate profits.
Brooks adds that ?IAC?s not valuing Tinder based on what it?s worth. They?re valuing it based on what they?ll lose if they don?t own it…..If Tinder can own mobile and own the younger demographic, then IAC is owning the future with Tinder. It?s an international phenomenon.?