IAC/InterActiveCorp Spins Off Match With Public Offering: Tinder, Plenty Of Fish, OKCupid

IAC/InterActiveCorp-owned (NASDAQ: IACI) Match filed with the U.S. Securities and Exchange Commission for an initial pubic share offering valued for at least $100 million today. Match is the parent of online dating companies like Tinder, OKCupid, and Plenty of Fish.

The news follows Wednesday’s filing by credit card processing company Square for a $275 million IPO. Square co-founder and CEO Jack Dorsey also serves as the CEO of Twitter, Inc. (NYSE: TWTR). Twitter shares have rallied on news of his decision to stay on as CEO after taking the position as a temporary measure, as reported by the Inquisitr, fighting back from the low $20s to the low $30s in price.

The Match deal is being underwritten by J.P. Morgan (NYSE: JPM), Allen & Company LLC, and BofA Merrill Lynch (NYSE: BAC). The Square deal is being distributed by Barclays (NYSE: BCS), Deutsche Bank Securities (NYSE: DB), Jeffries, Loyal3 Securities, RBC Capital Markets (NYSE: RY), J.P. Morgan, and Stifel (NYSE: SF).

IACI stock is up 29.3 percent over the last 10 years, compared with a return of 59.3 percent for the Dow Jones Industrial Average over the same period.

The revenue figures Match has reported in its filing are decent. From 2014 to the end of 2015, revenue growth of about 12 percent would be achieved if Match can break $1 billion in revenues, which looks possible. The company grew revenues 10.6 percent from 2013 to 2014 and 12.6 percent from 2012 to 2013, according to the Match filing.

Though IAC/InterActiveCorp is only expected to report $0.78 per IACI share in earnings, representing a contraction of 15.2 percent, with its financial results on October 27, growth is forecast to return in the fourth quarter, with EPS seen growing at a 3.0 percent year over year clip. Wall Street analysts see EPS numbers for IACI growing 22.0 percent for the full 2015-year. Growth of 33.1 percent is seen in 2016 and 19.2 percent annually over the coming five years. Eighteen analysts provide 2016 IACI EPS guidance.

Trading in initial offerings can be a risky proposition. Some, like those offered by Alibaba Group (NYSE: BABA), GoPro (NASDAQ: GPRO), and Twitter get bid up to incredible highs and then quickly sell off. Others, like Google, Alphabet (NASDAQ: GOOG, GOOGL), and Apple (NASDAQ: AAPL) might see their shares bid up for decades.

Investing in IPOs is best left to experienced investors. One method Investor’s Business Daily recommends is watching the price charts of IPOs with strong revenue and earnings growth to form consolidation patterns and to then use support and resistance points in determining when to buy and sell stocks. The newspaper says to watch for patterns between four and seven weeks long from stocks that might be big future winners. By definition, future big stock market winners will make their debut as IPOs. IBD also recommends limiting all stock market losses to a maximum of 8 percent.

When Google shares first started trading in August, 2004, for $84, split-adjusted to near $54 in the chart above, they formed a short consolidation around the range of the first day’s trade. After about four weeks, prices moved and stuck to the top end of the range, before breaking out and making new price highs almost daily for the next year. Do Match and Square have the same type of upside potential?

Like Alphabet, Match and Square are thoroughly immersed in technology and run consumer-oriented businesses. Of the two new IPO filers, only Match is profitable. Match had EBITDA of $273.4 million in 2014, while Square reported EBITDA of -$67.7 million as well as EBITDA of -$19.2 million for the first six months of 2015.

Match reported EBITDA of $96.7 million for the first six months of 2015 compared with $124.5 million for the same period in 2014, a decline of 22.3 percent. Over the same period Square decreased the size of its EBITDA loss to $19.3 million from $44.0 million.

[Feature Photo by Rick Gershon / Getty Images]