Grindr's Expanding LGBTQ+ Market and 20% Revenue Growth Impresses Goldman Sachs

Goldman Sachs analyst Eric Sheridan initiated coverage on Grindr Inc (NYSE: GRND ) with a Buy rating and a price target of $20 .

Grindr is an online dating platform primarily focused on serving the LGBTQ+ community with 14.6 million monthly active users (as of the third quarter of 2024) globally.

In this initiation, Sheridan framed his work around three key debates for Grindr stock, including the company’s addressable market, whether it achieves a 20%+ fiscal 2024-2029 revenue CAGR, and whether it can sustain a 40%+ adjusted EBITDA margin.

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Sheridan noted Grindr’s addressable market as large and growing, as the company is positively leveraged to both the addressable LGBTQ+ user market (his work sizes the 2024 addressable user market at a range of 40 million-80 million) and advertising opportunity.

Grindr modeled fiscal 2024-2029 revenues growing at a 20% CAGR driven mainly by direct revenue (primarily paying user growth) and indirect revenue scaling (advertising).

Sheridan expects adjusted EBITDA margins to remain stable, although margins are unlikely to remain linear as the company focuses on key growth investments over the next 12-18 months.

Based on Sheridan’s fundamental work, he noted Grindr as a revenue compounder with high margins that are positively leveraged to several long-term secular growth themes and opportunities within online dating. While the online dating sector has been impacted by ongoing investor debates around sources of user growth and user time and engagement, Sheridan noted Grindr as having a user demographic and core proposition that has performed well against such debates (which he expects to persist into 2025 and beyond).

Price Action: GRND stock is up 8.96% at $17.15 at the last check on Monday.

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