Tinder is not the most respectable of social applications. The location-based messaging application is concentrated on helping users meet new people, though its fame stems from its rumored use in the “casual dating” scene. IAC/InterActiveCorp (NASDAQ:IACI) announced it bought an additional 10% of the company, at a valuation of $5 billion on Friday April 11th. The move forced shares in the company higher.
Though it may seem counter-intuitive that IAC/InterActiveCorp (NASDAQ:IACI) shares moved higher on its own valuation of a company it owns the majority of, that’s exactly what happened on today’s market. The company’s shares have risen by about 4% at time of writing.
IAC picks up 10% of Tinder
IAC/InterActiveCorp (NASDAQ:IACI) picked up 10% of Tinder today for $500 million, valuing the full company at $5 billion. That’s a good deal more than Facebook Inc (NASDAQ:FB) paid for Instagram, or Yahoo! Inc. (NASDAQ:YHOO) paid for Tumblr, but things have changed in the past two years. Messaging has become central to the mission of social companies and user bases have become one of the most envied assets in the tech industry.
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Valued at a little over $5 billion itself, IAC/InterActiveCorp (NASDAQ:IACI) has been a second tier internet company for a long time. The firm owns properties like Ask.com and Dictionary.com as well as Vimeo.com. None of those services are close to as monetized as competitors from the major tech companies, and many of the company’s products are dwarfed in share by bigger competitors.
Tinder may be the next WhatsApp
The social messaging scene is arguably the hottest place in Silicon Valley right now. Recent moves into the industry by almost all of the players in tech have shown the importance of short messaging to advertising and engagement efforts. Facebook Inc (NASDAQ:FB) paid close to $20 billion for WhatsApp, the biggest messenger out there. Tinder might just be the next big thing in messaging, and that’s what investors are betting on as they drive shares in IAC/InterActiveCorp (NASDAQ:IACI) higher and higher.
Tinder currently produces no revenue streams, though that doesn’t seem to be the aim of tech giants in dealing with messaging apps. Engagement and user numbers appear to be more important to companies like Facebook Inc (NASDAQ:FB) right now, and acquisitions in the area appear to be picking up speed.
IAC/InterActiveCorp (NASDAQ:IACI) may not have the resources to develop Tinder into a money-making operation itself. It may, however, have the resources and the skill set to make the messaging app an attractive purchase for one of the many company’s trying to compete in the area. Tinder’s more adult reputation appears to be the only thing that could harm its value in a major acquisition, though that appears less than important to the investors driving up the value of IAC on today’s market.