Tinder hits back at co-founders’ lawsuit

Posted at 8:21 AM, Oct 10, 2018
and last updated 2018-10-10 11:37:19-04

Tinder wants a judge to throw out a lawsuit brought by its co-founders.

IAC, which owns Tinder’s parent company, filed a motion Tuesday to dismiss a court case that sought $2 billion in damages. IAC argues the co-founders were months too late to file such a suit.

Sean Rad and eight other co-founders of Tinder sued IAC and parent company Match in New York State court in August. They argued executives worked to have two Wall Street banks undervalue Tinder in 2017. That valuation set the price of stock options the co-founders were owed.

“The banks agreed with Rad on some issues, disagreed with him on others, and went forward with their work,” IAC said in its court filing. “When they were finished, Rad and his fellow plaintiffs exercised all of their options, receiving hundreds of millions of dollars as a result.”

IAC argues that Rad and the other plaintiffs brought the suit because Tinder’s valuation has increased since 2017. The company said the cofounders missed deadlines to challenge that estimate.

“Plaintiffs now seek to re-litigate the valuation in court to try and reap even more,” said IAC in its motion.

Tinder’s 2017 valuation was set at $3 billion, unchanged from a valuation that had been done two years earlier, despite rapid growth in revenue and subscribers, according to the plaintiffs’ original filing in the case.

“They lied about the financial performance. They manipulated financial data, and essentially stole billions of dollars by not paying us what they contractually owe us,” Rad said in an interview with CNN when the suit was filed. “We’re here to preserve our rights and to fight for what’s right, for what was promised us.”

The suit does not offer an alternative valuation, and when asked by CNN, Rad refused to give an estimate other than to say it was “multiples” of the $3 billion figure.

Tinder is expected to double its revenue this year compared to 2017, from $400 million to $800 million. IAC’s stock is up 65% this year.

In a statement responding to IAC’s motion, Orin Snyder, an attorney for the plaintiffs, said, “IAC and Match know they cheated Tinder employees out of billions of dollars. Their sham valuation is a case study of corporate dishonesty and corruption. When the jury sees the evidence, we are confident the talented team who built Tinder will prevail.”