Despite Falling Stock Value Analysts Eyeing Grindr for Revenue Potential
Contributed by: kellyseal on Monday, January 02 2023 @ 10:42 am
Last modified on Monday, January 02 2023 @ 10:52 am
After a rough patch at the end of November where the newly launched stock for dating app Grindr hit an all-time low, it is now looking more promising for potential investors.
Seeking Alpha[*1] reported that shares on November 29th opened at $8, reaching a high of $9 before falling to $6.52 in the late afternoon. The stock had only debuted on November 18, following its merger with SPAC Tiga Acquisition Corp which valued the combined company at $2.1 billion. Shares of the combined company rose over 500 percent before closing its first day at $36.50, but then plunged the next day and did not recover through the end of November and into December.
Grindr however released its third quarter earnings report in early December, noting that revenue for the quarter was up 32 percent year-over-year to $50.4 million, and year-to-date revenue was up to $140.5 million.
“We had an excellent third quarter and year to date as we prepared to enter the public markets. Financial results reflect growth in paying users and average revenue per user, supported by Grindr’s strong business model. We made solid progress on key strategic initiatives in developing our platform to better serve the needs of our community, including the ramp up of Boost, a premium add-on feature that enables connection beyond the hyperlocal,” said George Arison, Chief Executive Officer of Grindr in the company’s report[*2] .
Grindr’s low share value is not too surprising in the current climate for tech companies, even despite a good quarter for earnings. Dating app stock in general has been suffering, including Match Group and Bumble, due to the waning growth for subscriptions. Grindr is the latest to join the downward investment trend, which has been exacerbated by the recent decline in value of tech stocks in general.
According to Simply Wall Street[*3] , analysts are still interested in Grindr’s potential despite this downturn. Earnings for the company grew over 337 percent over the past year, but the stock is still trading 37 percent below its estimated value, making it a good buy right now.
Grindr is still showing tremendous growth and potential despite the setbacks. Analysts have also noted that the company’s ROCE (return on capital employed) has risen over the past year 22 percent, even though capital employed in the business has remained flat by comparison. According to Simply Wall Street, the business has increased efficiencies to generate the higher returns without needing to make additional investments. Analysts also noted that it would be beneficial to see what growth plans the company has going forward to compare to the trajectory it’s currently on.
Grindr went on to state: “As we execute on our strategy as a publicly listed company, we will look to deliver sustainable and profitable growth by better serving our community and achieving our mission of connecting LGBTQ people with one another and the world.”