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Short-selling firm Ningi Research has taken a short position on Grindr Inc. (NYSE:GRND), alleging the company is misleading investors with inflated metrics, hiding an SEC investigation, and suffering from a rapidly deteriorating product while insiders sell off hundreds of millions in stock.
Check out GRND stock price here.
The report claims management’s aggressive monetization tactics have created a “short-term sugar high” in revenue that masks a collapsing user base and a “fundamentally broken business”.
At the core of the allegations is Grindr's key metric, Average Paying Users (APU).
Ningi's report, citing a former executive, reveals an undisclosed SEC investigation into the metric that began in late 2023 after a data engineer flagged a “material concern” with double-counting and was subsequently fired.
The firm alleges Grindr quietly redefined APU to count daily purchases rather than unique monthly users, allowing a single person buying a subscription on Monday and a “Boost” on Tuesday to be counted as two separate paying users.
This strategy of extraction has led to what the report calls the “Enshittification of Grindr,” turning the app into a glitch-ridden “toxic wasteland” that is alienating its users.
This decay was reportedly accelerated by a “self-inflicted brain drain,” where a union-busting Return-to-Office mandate triggered the mass resignation of approximately 80% of the engineering team. The result is a broken product plagued by fake profiles, bugs, and a flood of ads, causing downloads to fall 12% as competitors like Scruff surge.
While the user base revolts, insiders have been “racing for the exits,” dumping over $236 million in stock in the last twelve months alone.
Ningi highlights the most severe near-term threat as an unnoticed margin call risk. The two largest shareholders have pledged a combined 59% of the company’s total stock as collateral for personal loans.
With the stock already down significantly, a further drop could trigger a forced liquidation of shares, creating a “self-reinforcing death spiral” that could wipe out shareholders. Despite these deep-seated issues, Grindr trades at a significant premium to its peers, a valuation Ningi argues ignores the rot at its core.
Grindr declined 0.26% on Tuesday and fell by 0.064% after-hours. The stock has declined 12.87% on a year-to-date basis, but it was up 33.79% over the year.
Benzinga’s Edge Stock Rankings indicate that GRND maintains a weaker price trend in the short, medium, and long terms. However, the stock’s momentum ranking was relatively decent at the 66.19th percentile. Additional performance details are available here.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Tuesday. The SPY was up 0.23% at $650.33, while the QQQ advanced 0.28% to $580.51, according to Benzinga Pro data.
On Tuesday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading mixed.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Tero Vesalainen / Shutterstock.com
