In February 2021, the Tinder rival Bumble took the leap onto the stock exchange. Shortly after the initial public offering, the share price shot up to $84 before gradually declining as investor euphoria subsided.

The stock experienced its latest low on Wednesday. After the company released its financial results, the shares plummeted by almost 15% to a low of $11.23, the lowest level since the IPO. It is therefore time to take a look at the business development of the dating specialist and the analysts‘ assessments.

Tinder co-founder involved in Bumble While the dating app Tinder is well known to most people by now, Bumble may be less familiar. However, there are some similarities. The Bumble app was launched in 2014 by 33-year-old Whitney Wolfe Herd, who also co-founded the major competitor Tinder and is now the youngest CEO to take a larger US company public. Bumble also has another well-known co-founder on board, Russian-British tech entrepreneur and billionaire Andrey Andreev.

Dating app with a focus on women A special feature of Bumble is that women make the first move in dating. This is meant to ensure a more respectful interaction on the platform. In addition to searching for a romantic partner, Bumble can also be used to find friends (Bumble BFF) or business contacts (Bumble Bizz). Users can also filter potential matches by political views and other criteria.

The US company operates the dating apps Bumble and Badoo, which now have over 50 million monthly active users and primarily target the 18 to 35 age range. The app is available in over 150 countries. However, the company is still in the early stages of monetization.

User growth in the fourth quarter In the last quarter, the user numbers for the two dating apps Badoo and Bumble developed differently: while the number of paying users for Bumble increased by 21% year-on-year to 2.68 million, the number for Badoo increased by 8% to 1.28 million. Overall, the number of paying customers was 4 million, 16% higher than in the comparable quarter of the previous year.

With a quarterly revenue of $221 million, the Bumble app accounted for 80% of the company’s total revenue. This represents an increase in revenue of 15.7%. The remaining $53 million was generated by the Badoo app and other revenue sources.

Overall revenue increases by 13% – but revenue per customer decreases In total, revenue increased by 13% to $274 million compared to the previous year’s quarter. However, the company earned less money per customer on average. For Bumble, revenue per user decreased by 4% to $27.37, while Badoo saw a slight increase of 2% to $12.69. Overall, the average revenue per paying user („ARPPU“) decreased by 2% to $22.64. The dating specialist reported a loss of $32 million. In the previous year, there was a loss of $159 million.

Management wields the cutting knife The company’s management is responding to the results below expectations with a drastic cutback and plans to cut 350 jobs, which is more than 30% of the entire workforce. The technology and product teams will be centralized at fewer locations and decision-making will be accelerated. The company also plans to prioritize artificial intelligence and security features.

As a result of the layoffs, Bumble expects one-time costs of $20 to $25 million. On the other hand, the company expects annual savings of around $55 million. Of these, $15 million will be selectively reinvested in product, technology, security, and brand areas.

The company expects revenue growth of 8 to 11% in 2024. At the same time, the adjusted earnings margin before taxes, interest, and depreciation (EBITDA) is expected to increase by at least 3 percentage points.

Analysts are divided Meanwhile, analysts are split on the stock’s evaluation. Of the 22 experts who have looked at the stock, 14 recommend buying the shares. The rest only see the stock as a hold position. Analysts expect earnings of 60 cents per share in 2024. This puts the price-earnings ratio at just under 19. Price targets range from $13 to $22, with the average target price of $16.04 well above the current market price (Source: marketwatch.com).