Match Group IPO: Can It Woo Skittish IPO Investors?

It seems that nothing is working with tech offerings right now. But this is not stopping Match Group. The company, which operates various dating sites, has filed its S-1 with the SEC.

Match Group IPO: Can It Woo Skittish IPO Investors?

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OK, so will investors find the right match with this deal?

Well, first of all, let’s get some background on the firm: Match Group is actually part of IAC/InterActiveCorp (IACI), which has used aggressive mergers and acquisitions coupled with internal development to put together marquee properties like Tinder, OKCupid, Meetic, Twoo, OurTime, FriendScout24 and, of course,

In fact, there are an assortment of other non-dating units, such as the Princeton Review (which provides test preparation services).

The dealmaking is likely to remain a key part of the strategy as well. After all, a few months ago Match Group agreed to shell out $575 million for PlentyOfFish, a fast-growing dating site.

Even though the online dating segment has been around since the early days of the Internet, there appears to still be opportunity for continued growth. According to the Match Group IPO prospectus, the addressable market is currently about 511 million and is expected to grow to 672 million by 2019. Some of the positive trends include the adoption of mobile and the Internet, the aging of the population and the increase in the number of singles.

As for the Match Group core business, the company certainly has a strong platform. There is a presence in over 190 countries and the number of monthly active users reached about 59 million in the latest quarter. About 4.7 million are paid members.

And yes, the Match Group has made a successful transition to mobile, with 68% of new members signing up from this channel. It definitely helps that the company has one of the hottest mobile dating apps — Tinder. Keep in mind that the app has been extremely popular with the elusive millennial generation.

The financials are also reasonable for the Match Group. Last year, revenues increased by 11% to $888.3 million, and the adjusted EBITDA came to $273.4 million.

Yet there are certainly risk factors. Let’s face it, cybersecurity has become very important, as seen with the massive data breach at Ashley Madison, which derailed the company’s own IPO.

What’s more, the Match Group’s Tinder app relies exclusively on the login technology of Facebook (FB). While this makes for a much more seamless experience and allows for strong user growth, there is always the potential for changes in the terms and conditions for the app usage. Consider that this has negatively impacted other former highfliers like Zynga (ZNGA).

But the biggest risk for the Match Group IPO looks to actually be the financial markets, which have been adverse to risk-taking lately. True, this does not necessarily mean a deal will not get done. But then again, the valuation may not necessarily be strong either as investors will likely want to get a discount.

As for the Match Group IPO, the company expects to list its shares on the Nasdaq under the ticker symbol of MTCH and the lead underwriters include JPMorgan Chase & Co. (JPM), Allen & Co. and Bank of America Merrill Lynch (BAC). However, the pricing terms were not set.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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