Match Group Disputes Claim It Intentionally Undervalued Tinder

Match Group
  • Friday, October 26 2018 @ 12:37 pm
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There’s no sign of a slowdown in the legal battle between Tinder co-founder Sean Rad and Tinder’s parent company, IAC/Match Group.

In August, Rad and nine other plaintiffs sued IAC over alleged devaluation. Rad claims the company undervalued Tinder in July 2017 at $3 billion to prevent him from accessing the full value of his stock options. The suit alleges that IAC created “a false picture of Tinder’s financial condition and prospects” resulting in “bogus numbers” and that “through deception, bullying, and outright lies, IAC/Match stole billions of dollars from the Tinder employees.”

IAC is now fighting back with a motion to dismiss the lawsuit, filed on October 9, which claims that Rad “fully participated in the valuation process” of Tinder and shares responsibility for the company being undervalued. Though IAC failed to accurately predict Tinder’s success over the past year, the motion argues, Rad also failed.

Match and IAC allege that, as part of the valuation process, Rad estimated that Tinder would bring in $500 million in revenue this year. Match Group guessed lower, around $450 million, and Barclays’ estimation fell in between at $485 million. In actuality, Tinder is on target to reach $800 million in revenue by the end of 2018.

In addition to the 2018 revenues discrepancy, the motion claims Match estimated revenue growth rates would plummet more than 90% over the next five years, while Rad forecast a decline of 93%.

The October 9 filing makes the case that these valuations were not significantly different, and that what difference there is cannot be considered corporate dishonesty.

“Rad fully participated in the valuation process, advised by lawyers and investment bankers, and provided the banks with his own projections that wildly underestimated Tinder’s success,” IAC/Match said in a statement. “When the banks determined Tinder’s value Rad exercised his options and cashed out as soon as was permissible. In doing so, Sean Rad bet against Tinder, and then watched from the sidelines as Match’s stock increased 150%. He cannot unwind that gamble now simply because he regrets it.”

Rad’s attorney Orin Snyder responded in a statement: “IAC and Match know they cheated Tinder employees out of billions of dollars. Their sham valuation is a case study of corporate dishonesty and corruption. When the jury sees the evidence, we are confident the talented team who built Tinder will prevail.”

This is not Match Group’s only headline-making legal crusade. The company is also currently embroiled in a lawsuit with Bumble, which alleges that Bumble stole key functionality from Tinder. Bumble countersued in March and Match Group called for Bumble’s lawsuit to be dismissed in September.