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Topeka Capital Sees Ad Potential in IAC's Tinder Mobile App

By Uri GruenbaumStock MarketsJan 18, 2015 06:45AM ET
www.investing.com/analysis/topeka-capital-sees-ad-potential-in-iac%27s-mobile-app,-tinder-238844
Topeka Capital Sees Ad Potential in IAC's Tinder Mobile App
By Uri Gruenbaum   |  Jan 18, 2015 06:45AM ET
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IAC/InterActiveCorp (NASDAQ:IACI) focuses on the areas of search, applications, online dating, media and e-Commerce. One of the most popular mobile applications among teenagers and young adults that IAC runs is a dating app called Tinder. Topeka Capital analyst Victor Anthony maintained a Buy rating on IAC with a price target of $87 on January 16th citing the ad potential on Tinder that could lead to increased monetization.

Tinder is a mobile application that allows users to view other users' photos and “swipe right” if they like what they see or “swipe left” if they don’t. Tinder is currently running an ad from iHeartRadio in which users who swipe right three times are entered into a sweepstakes to win a couple's Valentines weekend in Las Vegas, Nevada. Impressed by iHeartRadio’s ad on Tinder, Anthony believes “this is indicative of how Tinder could add ads to [their] potential monetization efforts.”

IAC currently uses the paid transactions model more often than advertising in order to bring in revenue. While Anthony sees “more opportunity overtime with the paid user transactions model,” he believes “advertising could be meaningfully incremental if done correctly.” In their latest earnings, IAC posted “$75M in EBITDA IAC guided to for Tinder at 50% margins [which] impl[ies] revenue of $150M.” Anthony feels “adding advertising could clearly help them get there.”

Victor Anthony currently has an overall success rate of 56% recommending stocks and a +13.8% average return per recommendation.

Victor Anthony's TipRanks Success Rate
Victor Anthony's TipRanks Success Rate

Anthony is known for rating internet related stocks, such as Yahoo! (NASDAQ:YHOO) and Amazon (NASDAQ:AMZN). On July 10, 2014, the analyst reiterated a Buy rating on Yahoo! when the stock was priced at $34.93 a share. Since then, Yahoo! shares have gone up to $46.47, marking a 33% upside. Anthony has rated Yahoo! 11 times since April 2013, earning an 82% success rate recommending the stock and a +23.0% average return per recommendation.

On the other hand, Anthony recently reiterated a Buy rating on Amazon on January 13, 2015 when the stock was priced at $294.74 a share. The stock has since dropped to $290.74 a share. Anthony has rated Amazon a total of 17 times since May 2012, earning a 41% success rate recommending the stock and a -2.1% average return per recommendation.

Topeka Capital Sees Ad Potential in IAC's Tinder Mobile App
 

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Topeka Capital Sees Ad Potential in IAC's Tinder Mobile App

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Fernando Ardenghi
Fernando Ardenghi Jan 20, 2015 10:35PM GMT
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Have you seen the annual revenue of Match, Chemistry, OkCupid, Meetic, and other IAC's online dating sites excluding Tinder? In the range of USD 800 Million with profits. The prospective revenue of Tinder is no more than USD 100 million because it will not outperform Badoo.... .As a social discovery site, Tinder, could make no profit at all, like Zoosk! (ZSK)..Recently, Badoo backed Bumble (by former employees of Tinder) in order to compete with Tinder.
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Fernando Ardenghi
Fernando Ardenghi Jan 20, 2015 10:31PM GMT
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Have you seen the annual revenue of Match, Chemistry, OkCupid, Meetic, and other IAC's online dating sites excluding Tinder? In the range of USD 800 Million with profits. The prospective revenue of Tinder is no more than USD 100 million because it will not outperform Badoo.. . . . As a social discovery site, Tinder, could make no profit at all, like Zoosk! (ZSK). . Recently, Badoo backed Bumble (by former employees of Tinder) in order to compete with Tinder.
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