Bumble Starts Trading After Its $2.15 Billion IPO. Should You Buy?

Bumble Starts Trading After Its $2.15 Billion IPO. Should You Buy?

February 12, 2021 0 By Hitz
Bumble CEO Hopes Female-Led Firms Become the ‘Norm’

Bumble Inc. has started trading at a time when the market is at fever pitch.

Less than a couple of weeks ago, the mania over GameStop Corp. and other “meme” stocks such as AMC Entertainment Holdings Inc. riveted the world. A horde of traders congregating on Reddit’s WallStreetBets forum drove up share prices, which later tumbled just as dramatically. That rollercoaster followed a banner year for the stock market as a whole, and initial public offerings in particular.

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So now, should you buy into Bumble? Shares of the company — which operates a matchmaker app where women make the first move — were trading on the Nasdaq exchange at around $77 in New York Thursday, up roughly 80% from the IPO price of $43.

Food-delivery company DoorDash surged 86% on its first day of trading in December, and a day later, Airbnb more than doubled in its debut. In all, first-day rallies were nearly three times bigger in 2020 than the average of the last 40 years. Susquehanna International Group analyst Shyam Patil last week said he expects Bumble’s stock to rise from its IPO price.

For retail investors curious about Bumble, here’s our guide to how the company has fared and what to keep in mind if you are considering the stock as part of your portfolio.

How is the company doing?

Whitney Wolfe Herd, who co-founded Tinder, launched Bumble in 2014 as a way to change the power dynamics of dating for women. The app allows women to make the first move by messaging potential dates. It has subsequently added features, such as Bumble BFF and Bumble Biz, that introduce new friends and business contacts, respectively.

Also read: Bumble’s 31-Year-Old CEO Becomes a Rare Female Billionaire

Austin, Texas-based Bumble now operates in more than 150 countries and has experienced rapid growth in recent years. SensorTower estimates that along with Badoo, Bumble’s European brand, the company has amassed about 54 million monthly users. That’s second only to Tinder-operator Match Group Inc.’s 100 million, according to Bloomberg Intelligence. Bumble posted a net loss of $84.1 million in the period from Jan. 29 to Sept. 30 last year, after generating total revenue of $376.6 million, according to a regulatory filing.

The Covid-19 pandemic curtailed most in-person dating. With stay-at-home orders in place, the online dating market has boomed as people continued to seek out connections in the digital realm. Yet it’s unclear whether those looking for love will stay online post-pandemic. And then there’s the matter of whether people are willing to pay for dating apps — and if the companies can continue to grow in a competitive market.

What’s the case for buying?