While Grindr’s impressive debut on the New York Stock Exchange has been widely reported, some are already feeling sceptical about its new position.
The Financial Times writes that Grindr’s increase in stock value on its debut “requires viewing with a healthy dose of scepticism”. As around 98% of investors in Tiga Acqusition, who bought Tinder, chose to redeem their stake, a relatively low number of shares were left for trading. This leads to significant swings in terms of value.
The report details how some Spac mergers this year have been unsuccessful, with an average loss of about 49% for the first 9 months of the year.
Another issue is that Grindr’s enterprise valuation is 14 times its 2021 revenue. Whereas Match and Bumble in comparison trade at just 5.5 times their 2021 revenue. This means that Grindr must generate significant growth to match its high valuation.
“A new tax on stock buybacks which could be applied to Spacs provides extra incentive to redeem any funds before the tax comes into force in January. Against this backdrop, investors who have asked Spac sponsors to return their money in full, with a bit of interest on top, look smart”, the Financial Times concludes.