FORTUNE -- Tinder may not be worth $5 billion, but investors say the dating app remains an extremely valuable product.
A Bloomberg report Friday said IAC/InteraActiveCorp., owned by Barry Diller, had bought another 10% of Tinder from venture capitalist Chamath Palihapitiya for $500 million, valuing the mobile-dating site at a whopping $5 billion (compared with IAC's market capitalization of about $6 billion). That high valuation surprised investors, and Palihapitya later said in a Tweet that he had sold his stake in the company for "much less." Tinder and IAC declined to comment on the reported valuation.
Regardless of Tinder's actual current valuation, investors Fortune spoke with agree the app has potential. An updated form of "Hot or Not," a rating site that allowed users to rate the attractiveness of photos submitted by others, Tinder users swipe profile photos right for "Hot" and left for "Not." It has 10 million daily users performing 750 million "swipes" per day.
"I can believe that the valuation on the deal was $500 million, though," says Jeremy Liew, a partner at Lightspeed Ventures, who points to the fact that Tinder has entered popular culture and become a verb, right alongside behemoths like Google (GOOG).
"They're reinventing a very valuable category (online dating) by taking a 'work flow automation approach' that first-generation companies took and turning it into something that is fun to do, that people voluntarily and repeatedly come to do," he said.
Jared Fliesler, a partner with Matrix Partners, argues $5 billion is a steep valuation given the company reportedly has no revenue to speak of. But IAC may have a different set of criteria to consider from outside investors given its ownership of other online dating properties including Match.com, OKCupid, and Chemistry.
"If Tinder is the new top of the funnel that feeds to all other properties, IAC has a totally different investment decision to consider with significantly more value extraction available," Fliesler said. "There's also the competitive elements of keeping other people in dating from the 'feeder' into their deeper/high monetizing dating products."
In other words, Tinder may not be a $5 billion property, but don't underestimate its monetary potential.
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