Bumble: I Like Where This Is Headed

Mar. 21, 2021 2:26 PM ETBumble Inc. (BMBL)13 Comments
Gary Alexander profile picture
Gary Alexander
25.37K Followers

Summary

  • Shares of Bumble have vacillated between gains and losses ever since its February IPO.
  • In early March, the company reported tremendously strong Q4 results that beat Wall Street's expectations and saw 31% y/y revenue growth.
  • A strong first earnings release since going public is often a bullish barometer for the stock's direction.
  • Though certainly not cheap, Bumble is reasonably valued at ~16x forward revenue for its growth profile.
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For the most part, heavily hyped-up IPOs, especially well-known ones in the consumer space, often see their shares rocket up way too high to be considered as long-term holds. Surprisingly, Bumble (NASDAQ:BMBL) is an exception. The most notable rival to Tinder and a dating app known for having women initiate the first message, Bumble went public in early February, but its stock has failed to find direction either up or down since then. In spite of Bumble's rapid growth and even its strides toward profitability, the stock has failed to truly "pop" and win over investors' love.

In early March, Bumble reported earnings for the first time. It grew revenue at 31% y/y, saw a massive jump in paid users, and drove substantial adjusted EBITDA and cash flow growth. Still, investors were unmoved, and the stock is actually down nearly 10% since its earnings report.

In my view, Bumble's combination of strong fundamental performance plus its modest share price movements create a strong opportunity for investors to jump in at a reasonable price:

Chart

In my view, there are a number of elements behind the bullish thesis for Bumble:

  • Online dating is a huge market, and perhaps one even bolstered by the pandemic. According to Bumble, the global online dating market raked $5.3 billion in revenue and is expected to grow to $9.9 billion by 2025.
  • Bumble is the number-one rival to Tinder, and its branding stands in stark contrast to the #1 dating app. Bumble's mantra of "date honestly," and its branding of being a female-centric app directly address some of the biggest criticisms of Match Group's (MTCH) Tinder.
  • Strong growth, and opportunity for conversions within the user base. Bumble is growing at a >30% y/y pace. Note as well that in addition to grabbing new users, there's a strong opportunity to

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This article was written by

Gary Alexander profile picture
25.37K Followers
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in BMBL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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