“Women-make-the-first-move” dating app Bumble (NASDAQ: $BMBL) went public on February 11th, becoming the hottest buzzword this Valentine’s Day.
Founded by Whitney Wolfe Herd in 2014, Bumble differs by emphasizing women empowerment and gender equity as well as allowing to switch between different modes with different purposes. Women who are looking for a heterosexual relationship have to message first on “Bumble Date” to keep the match, while “Bumble Bizz” and “Bumble BFF” are used to expand users’ networks and social circles. The app is free to download and use, with paid features and perks such as additional 24 hours to receive the first message or receive a reply.
So what’s all the buzzing about?
Over the last year, Bumble was one of many tech companies that saw exponential growth in their user base and revenue due to the pandemic. Bumble hit 100 million users on the platform in 2020, with 42 million active users and 2.4 million total paying users as of September. Compared to the first nine months in 2019, Bumble grew its revenue by 15% in 2020, with total revenue of $416.6 million.
Though Bumble currently is not profitable, the margins are improving, meaning that the revenue minus cost is decreasing — Jim Cramer from CNBC highlights that Bumble is the “superior growth stock” compared to the competitor Match Group’s (NASDAQ: $MTCH) dating apps Tinder and Hinge. While Bumble is not profitable at the moment, the share price is way lower than Match Group’s — this means that there is room for profit for future investors as Bumble catches up to Match Group.
Bumble raised $2.15 billion in its IPO — Initial Public Offering that allows shares of a company to be sold to investors — on February 10th, with the market value at $8.3 billion and share price at $43. During the first day of trading on the 11th, Bumble surged and closed at $70.31, valuing the company at $13 billion.
All this is very exciting news for women in business — CEO Whitney Wolfe Herd is now the youngest female CEO to take a U.S. company public. As a working mom, she responded that “it’s a little sad to me that I’m the youngest… I hope to break those barriers.” With the majority of the executive leadership and the Board being female-led, Bumble aims to foster the female-empowered safe, and diverse space within the platform.
Let’s get down to business: Is Bumble a good buy?
The room for growth is there. Bumble may expand 20% through 2023, and with its competitive edge and socially empowering management, I do believe that this growth is possible. Bumble may not be the best option if you are looking for the most stable stock there is, as it is still a startup in the dating app industry. But if you are trying to diversify your portfolio and you believe in the permanent shift towards the online dating scene, Bumble is a great opportunity to buy into the dating app industry.
When the pandemic ends…
By now, many of us wonder if the future landscape of dating is forever changed. What will happen when it does become safe for us to go outside again? To this, I can confidently say that dating apps will continue to be used — if not used even wider than it is now. Now that people have tasted the convenience of finding love and making connections literally at their fingertips, they will continue to do so with the lifted Covid restrictions, bringing virtual dates to real life. With Bumble’s motto and the three modes, Bumble is expected to stay buzzing in 2021.