Earlier this month, Grindr, the world’s most popular dating app for the LGBTQ+ community, became a public company. Presumably that’s because its majority owners are marching toward their own gigantic personal financial crisis. Director Raymond Zage and founder James Lu have control over 60 percent of the company. They are now looking at or seeking ways to take the app private following an 80 percent drop in its stock value. This recent downturn has only exacerbated financial pressures on Zage and Lu, causing them to rethink their investment strategy.
Raymond Zage, a former hedge fund manager and current Singapore resident, and James Lu, a Chinese-American entrepreneur with previous roles at Amazon and Baidu, acquired Grindr in 2020 for more than $600 million. They completed the company’s access acquisition via a blank-check merger in 2022, making it public. That reality has changed drastically in the past few months. Grindr’s stock first started to flop around the end of September, concerning investors with each quarter showing narrowing profit margins.
As Grindr’s initial public offering stock price plummeted, Zage and Lu’s financial situation worsened. The pair pledged almost all their stock. They did this by putting them up as collateral for private loans from a unit of Singapore’s sovereign wealth fund, Temasek. The then-unraveling stock slide halved the value of their stock holdings. In response, Temasek’s unit last week executed a forced share redemption and sale of a substantial number of Grindr’s shares.
Despite the chaos, Grindr just announced a 25% bump in profits for Q2 of this year. Even with the strong performance, investor fears are as acute as they have ever been. Concerns about executive turnover and long term effectiveness continue to haunt stakeholders. The combination of these factors has contributed to the owners’ desire to explore a private acquisition as a means to stabilize their financial situation and regain control over the company’s trajectory.
