GRND (Grindr): BUY stock
Leg: BUY GRND
Thesis. Grindr raised its guidance on November 5 and the stock has not responded. Q3 revenue rose 22% to $141.4M, above the $136.6M consensus. Adjusted EBITDA was $61.7M, 11% above consensus according to Citizens JMP. Management raised 2026 guidance to at least $560M of revenue and $236M of adjusted EBITDA. It also gave its first 2027 outlook a quarter earlier than usual: at least $705M of revenue and $275M of adjusted EBITDA. Average paying users grew 10.9%. The shares trade at $13.40, about where they were before the report. That is 28% below the $18.50 year high. The stock fell 13% to below $15 when Grindr announced the Freddie telehealth acquisition on September 30. Goldman Sachs raised its target to $20 on November 6, and analyst targets run from $19 to $22.
Edge is the next catalyst. It is a $120-a-month AI tier that launches worldwide on November 17. Wired reports that membership is capped at 1% of Grindr's 16M monthly users, or about 160,000 people. A full cap would bring in roughly $230M a year, compared with $560M of total revenue for 2026. Seeking Alpha counts 400,000 early-access signups. Signups are not paid subscriptions, so the paid number is the open question.
Valuation is modest. The market cap is $2.4B. AInvest put debt at $475M before the $190M cash payment for Freddie, which makes enterprise value about $3B, or roughly 11 times the 2027 EBITDA guide. Q3 showed a GAAP loss because of a one-time $33M UK litigation charge. Excluding that charge and deal costs, net income was $21M.
Why stock over options. IV rank is 65 and IV percentile is 86, so options are expensive. Beta is 0.60, so this position moves less with the chip and AI selloff driving the market this week.
Main risk. Margins are falling. The adjusted EBITDA margin was 44%, down from 47% a year ago. The 2027 guide implies EBITDA growth of about 17% on revenue growth near 26%, because Freddie and Edge add costs. The multiple could shrink further if Edge's price drives users away or the health business keeps losing money.
Dilution is also possible. Freddie's $60M stock component and an earnout of up to $70M tied to 2027 targets could add shares. Controlling shareholders hold a large stake, and the 2025 take-private offer was withdrawn, so a buyout should not be counted on to support the price.
Liquidity is rated 3. Use limit orders, since the spread was 19 cents this morning. The next earnings report is expected in late February or early March.