We came across a bullish thesis on Grindr Inc. (GRND) on Value Zoomer’s Substack by Myles Kuah. In this article, we will summarize the bulls’ thesis on GRND. Grindr Inc. (GRND)’s share was trading at $14.93 as of Nov 21st. GRND’s trailing P/E was 134.66 according to Yahoo Finance.
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Grindr has emerged as a standout business within the dating app industry, distinguished by its unique market positioning and strong financial performance. Unlike traditional dating apps, Grindr operates as a gay hookup platform, allowing users to connect with others nearby without requiring a mutual match. This innovative design, paired with features like advanced filters, paid subscriptions, and ad-supported free use, creates a compelling user experience that drives engagement and monetization. Its dominance in the LGBTQ+ niche, supported by unmatched brand recognition and network effects, positions Grindr as the clear leader in its segment.
Grindr benefits from an expanding target market as 11% of Gen Z men identify as LGBTQ+, compared to 5% of millennials and 3% of Gen X. This demographic also boasts higher disposable incomes due to fewer financial obligations, making it an attractive and profitable customer base. Furthermore, Grindr’s focus on casual connections, rather than relationships, ensures consistent user activity and enhances the value of its paid features. The platform’s ability to cater to the fluid dynamics of gay attraction gives it a competitive edge, particularly for users seeking specific preferences or experiences.
From a financial perspective, Grindr is highly efficient, with revenue growing at 35% annually and operating margins of 20%. The company’s return on invested capital hovers near 40%, reflecting its asset-light business model. Recent refinancing efforts have reduced interest expenses, enabling Grindr to allocate more resources toward growth and debt reduction. Although the company carries $300 million in debt, its robust free cash flow generation positions it well to manage and reduce this liability.
Valuation remains a critical factor, with Grindr trading at a P/E of nearly 60, factoring in its outstanding warrants. While this valuation underscores its growth potential, it leaves little room for error. Investors remain cautious about management, citing concerns over promotional behavior and the CEO’s involvement in a prior SPAC-backed company that ultimately filed for bankruptcy. Despite these risks, Grindr’s dominant market position, scalable business model, and expanding customer base present significant long-term opportunities. A more attractive entry point could unlock value for investors willing to capitalize on this high-quality business.
Grindr Inc. (GRND) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held GRND at the end of the third quarter which was 27 in the previous quarter. While we acknowledge the risk and potential of GRND as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GRND but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.