The wild popularity of the red-hot Tinder hook-up app left Barry Diller a little cold in the fourth quarter.
Diller's IAC/InterActiveCorp warned Wall Street on Wednesday that it may take longer than expected for Tinder to turn profitable.
Plans to "monetize" the free Tinder app — transform it into a moneymaking machine by requiring paid subscriptions, tacking on fees for special features, and selling ads — have been delayed until mid-March from an initial January target, execs said.
Since December, tests of the premium "Tinder Plus" app have included adding the ability to "undo" after swiping past a dating profile.
Currently, a profile that gets swiped is gone forever.
The paid version, which is currently being tested for the iOS and Android mobile operating systems, will also have a "Passport" feature that allows users to search beyond their immediate geographic area.
"It's a little later than we thought, but that's the life of the startup," said Greg Blatt, chairman of IAC's Match Group dating-site unit — which include Match.com, OKCupid and Tinder.
"It's a 2-year-old company, and we're not going to get hung up on quarter-to-quarter projections," Blatt said.
So, with Tinder being popular and free — its user base tripled in January from the year earlier to 10 million active daily users — it appears to be cannibalizing Match Group's paid subscriptions. They fell by 1000,000 in the fourth quarter from the previous three-month period.
The decline helped spook IAC investors, who bid down the price of IAC shares by 6.3 percent on Wednesday, to $60 in very heavy trading — the company's worst one-day selloff in more than a year.
Paid subscriptions at Match Group fell to 3.5 million in the fourth quarter. Some on Wall Street were forecasting a slight increase.
Previously, IAC has told Wall Street it believes Match Group can generate $500 million in Ebitda, or earnings before interest, taxes, depreciation and amortization, by 2016.
On Wednesday, however, Blatt was coy when pressed specifically about the 2016 target.
"I'm not saying we'll necessarily hit it," Blatt said.
"I'm saying it's a good target. … Whether it does it in the four quarters ended in 2016 or misses by a quarter or two, that's hard for me to pinpoint at this point," he continued.
RBC Capital Markets analyst Mark Mahaney, in a note to clients, said he believes IAC "will have to backtrack" on its $500 million Ebitda forecast for 2016.
Instead, Mahaney wrote, $400 million is "achievable" and "still impressive."
"We believe that the long-term Tinder $ growth story is still very much intact," Mahaney wrote, reiterating a sector perform rating on IAC shares.
"Startups, like relationships, usually face a few bumps along the road."
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