Tinder's co-founders, Sean Rad, Jonathan Badeen, Justin Mateen, Joe Munoz, Alexa Mateen, Dinesh Moorjani, and Whitney Wolfe are now suing the company's former parent company, IAC for $2 billion. The argument here is that IAC undervalued Tinder when it merged the property with Match Group - also owned by IAC, to avoid paying the founders. This was done so that IAC wouldn't be on the hook to pay the co-founders, who owned about 20-percent of the company, combined. The contracts that IAC signed with Tinder's early employees, agreed that it would value the company at four separate times, once in 2017, 2018, 2020 and 2021. Afterwards, Tinder employees could sell their stock options in Tinder based on the valuations.
The suite that Rad and a few others filed on Tuesday, claimed that IAC used "misleading and incomplete financial information" to value Tinder at around $3 billion in 2017. That's below what Rad and others at Tinder believe the company is worth. For example, in 2018, Tinder is expected to bring in about $800 million in revenue. That is significantly higher, almost double, what the projected number was that was used in the 2017 valuation.
Since IAC merged Tinder in with Match Group, it has become the biggest part of that group, among the many dating and hookup apps that Match Group has under its umbrella. Each and every quarter, Tinder has been the one bringing in the most revenue and more users each quarter. So the undervaluation of Tinder by IAC does seem pretty legitimate, though that is going to be up to the judge to decide, in a few months. It'll be interesting to see what the judge does decide to do in this case, as it does seem that IAC used incorrect projected numbers. Or it could be a case of Tinder doing much better in 2018 than many thought it would do - especially with its paid service doing so well now.