Barry Diller always wants to be different.
While equity investors have mostly snubbed initial public offerings in 2015, the media mogul Barry Diller, ever the contrarian, is betting he has what it takes to please the market.
Diller, the chairman and controlling stakeholder of IAC/InterActiveCorp (IACI) , is selling around 20% of his Match Group, featuring the wildly popular dating app, Tinder. So far in 2015, stocks launched as IPOs have declined 5%, a poor showing compared to 2014, when IPOs rose at a weighted average of 21%, and compared to 2013, when they finished the year 40% higher, according to data compiled by Renaissance Capital.
The strength of IAC's Match, which includes Tinder as well as OKCupid and, in the coming months, PlentyOfFish, is that Match has already proven it can generate profits while claiming substantial market share in a dating industry that is already saturated by new services and apps.
"Investors are going to be interested in this company," said Kathleen Smith of Renaissance Capital, manager of IPO-focused ETFs. "They have a lot of revenue ... and they have a lot of profitability. And the bulk of revenue is not from advertising, it's from subscription."
Match officially filed for an IPO on Oct. 16 after announcing plans in July, saying it plans to trade Match under the ticker "MTCH" on the Nasdaq exchange, but it has not yet announced pricing or a timeline. In its prospectus, Match reported $888.3 million in revenue in 2014, up from $803.1 million in 2013 and $713.5 million in 2012, according to its SEC filing. Net earnings were $148.4 million, up from $125.0 million a year prior.
One key to the Match offering is the early success of Tinder's subscription service, Tinder Plus, which is responsible for as much as $100 million in sales. Tinder, the three-year-old dating app that claims to generate 26 million matches a day, is best known for allowing users to swipe the pictures and bios of people they like to the right and discard others to the left.
But Tinder faces increasing competition from a stream of new apps like Happn, which is also primarily photos-based, and Bumble, which gives more control over conversations to the woman. In fact, Apple's iTunes has hundreds of apps for dating.
But analysts like Kessler say the saturated market isn't even close to hampering Match's edge in a dating service industry has long been ripe with competition.
"There's always been emerging competition in this category," Kessler said. "No one knows what's around the corner, but right now, if you're in the market for online personal services, they have something for you. ... They have become the dominant provider."
Match's financials are strong. And it is a consumer-facing Internet company, similar to Angie's List or Yelp, that draws a reliable revenue stream from a subscription base. That makes it a standout among IPOs these days, says Smith of Renaissance Capital. She said while the IPO climate is tumultuous, few consumer companies have been pricing above their projected range. But Match could buck the trend.
"They've managed to get a fairly large share of this market," Smith said. "We haven't seen too many other IPOs like it."
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.