IAC/InterActiveCorp. recently bought back 10 percent of mobile-dating site Tinder, said Sam Yagan, chief executive officer of IAC’s Match.com
IAC purchased the stake from venture capitalist Chamath Palihapitiya, Yagan said, who oversees the company’s Match.com, Tinder and OKCupid properties. He said the 10 percent stake wasn’t priced at $500 million and he added that Tinder isn’t valued at $500 million. He declined to elaborate further.
IAC had $3.02 billion in sales last year, with more than a quarter of that coming from its primary dating site Match.com. Greg Blatt, chairman of Match, said on a February conference call that the Tinder service is in development stage, “bringing down the earnings without contributing to the revenue growth.”
In a Twitter Inc. post, Palihapitiya wrote that he sold his stake and that the value was “much less” than $500 million.
IAC shares rose less than 1 percent to $68.82 at the close in New York.
The New York-based company said in December that it was turning Match into a separate business, setting the stage for a potential spinoff. The dating services business in the U.S. grew an average of 3.5 percent a year from 2008 to 2013, reaching $2.1 billion last year, according to researcher IBISWorld. IAC has the most market share at 28 percent.
Palihapitiya, founder of Social+Capital Partnership in Palo Alto, California, gained his stake in Tinder in 2012, when he bought a majority of Xtreme Labs, a Toronto-based mobile development startup. Xtreme created the first Tinder application in exchange for equity in the company.
Palihapitiya kept control of his Tinder stake even after Xtreme Labs was bought last year by Pivotal, the person said. Tinder’s daily users doubled to 10 million currently from 5 million in December.
The Tinder app lets users sign on with their Facebook Inc. credentials and makes algorithmic recommendations based on their profiles. Users are shown a face and can pursue a chat with the person and perhaps a date or swipe onto the next suggestion.
“I have been developing online businesses for quite a while now -- since the Internet started,” Diller told Bloomberg.com’s Tech Deals Blog recently. “I have never had the number of people banging through our doors to see if we would sell them a little piece of Tinder.”
Matt Cohler, a partner at venture firm Benchmark and former Facebook executive, is among investors that have been trying to get in the door, the person said. A representative for Benchmark declined to comment.