Tinder is getting closer to going public and it could be worth up to $3 billion

As Barry Diller's IAC prepares to spin off it's Match Group later this year, all eyes will be on Tinder.

Back in June, IAC announced that it would pursue an IPO for less than 20% of common stock of The Match Group.

This business segment includes Tinder - a dating app that asks users to swipe right to find a math - match.com, OKCupid, as well as non-dating brands like The Princeton Review.

Analysts at Bank of America Merrill Lynch valued Tinder at $1.35 billion following the IPO announcement in June. But using the average of peer subscription services, BAML says a bullish scenario could result in Tinder revenue of $250 million and a $3 billion valuation.

The BAML analysts said they estimated a value of $27 per user for the app's 50 million users - thus leading to a valuation of $1.35 billion. However, they added that this estimate is below the $33 per user Facebook paid for Instagram, and the $42 per user they paid for WhatsApp. And it's on this basis that Tinder could have a more lofty valuation.

On Tuesday, IAC reported a better-than-expected profit of $59.3 million for quarter, compared to an $18 million loss a year earlier.

Due to legal restrictions associated with the impending IPO, executives were only able to give a very limited outlook for The Match Group. But the little information they did release showed great news for Tinder.

In a note to clients on Wednesday, analysts at Oppenheimer estimated that Tinder's US paid user base grew 80% from Q1, while it's international paid users grew 70%. Oppenheimer, and analysts at other banks, all seemed to agree that Tinder now has about 500,000 paid subscribers. On this basis Oppenheimer valued Tinder at $1.31 billion.

"Monetization continues to perform at or above our expectations on key metrics like renewal, conversion and re-subscription rates, and we've seen no discernible negative correlation between monetization and growth," Match Group CEO Greg Blatt said in prepared remarks.

"We've also been focusing on the core user experience, and those efforts are starting to payoff, as we've seen our app store rating climb to an industry leading 4.5 stars, and a number of our user experience metrics are showing improvement."

The company also reported that Tinder was a "major contributor" of paid user growth this quarter after launching its paid version, Tinder Plus, earlier this year. As of October 2014, IAC said that Tinder had more than 50 million active monthly users who were collectively swiping over 1 billion times a day.

Tinder said it will work to further monetize the app in the coming months, and Wall Street will be looking very closely at how this pans out as the IPO approaches.

One analyst called it the "swing factor" for the IPO price.