IAC/InterActiveCorp (NASDAQ: IACI) focuses on the areas of search, applications, online dating, media and e-Commerce. One of the most popular mobile applications among teenagers and young adults that IAC runs is a dating app called Tinder. Topeka Capital analyst Victor Anthony maintained a Buy rating on IAC with a price target of $87 on January 16th citing the ad potential on Tinder that could lead to increased monetization.
Tinder is a mobile application that allows users to view other users photos and “swipe right” if they like what they see or “swipe left” if they don’t. Tinder is currently running an ad from iHeartRadio in which users who swipe right three times are entered into a sweepstakes to win a couple’s Valentines weekend in Las Vegas, Nevada. Impressed by iHeartRadio’s ad on Tinder, Anthony believes “this is indicative of how Tinder could add ads to [their] potential monetization efforts.”
IAC currently uses the paid transactions model more often than advertising in order to bring in revenue. While Anthony sees “more opportunity overtime with the paid user transactions model,” he believes “advertising could be meaningfully incremental if done correctly.” In their latest earnings, IAC posted “$75M in EBITDA IAC guided to for Tinder at 50% margins [which] impl[ies] revenue of $150M.” Anthony feels “adding advertising could clearly help them get there.”
Victor Anthony currently has an overall success rate of 56% recommending stocks and a +13.8% average return per recommendation.
Anthony is known for rating internet related stocks, such as Yahoo! (NASDAQ: YHOO) and Amazon (NASDAQ: AMZN). On July 10, 2014, the analyst reiterated a Buy rating on Yahoo! when the stock was priced at $34.93 a share. Since then, Yahoo! shares have gone up to $46.47, marking a 33% upside. Anthony has rated Yahoo! 11 times since April 2013, earning an 82% success rate recommending the stock and a +23.0% average return per recommendation.
On the other hand, Anthony recently reiterated a Buy rating on Amazon on January 13, 2015 when the stock was priced at $294.74 a share. The stock has since dropped to $290.74 a share. Anthony has rated Amazon a total of 17 times since May 2012, earning a 41% success rate recommending the stock and a -2.1% average return per recommendation.