This week, we figured we’d argue about dating app stocks--just like we each did on our last date (not with each other!)
But, sometimes, even stubbornly opposite financial journalists unexpectedly agree, as we found ourselves on the same page regarding the newly-listed Bumble Inc. (Nasdaq: BMBL), which on Friday traded at $70.68 per share, 64% above its pricing at $43 last week. Why do we see a better upside on BMBL than Match Group (Nasdaq: MTCH)? Read on to find out.
Anthony: Well, well. It looks like we finally agree on something, Anna.
Anna: For once, this won’t be a losing bet for you.
Anthony: Ha. Well, I still feel pretty good that my fortune will change by the year’s end. Anyways, what’s your take on Bumble’s IPO and were you surprised by how much the stock has gained so far?
Anna: There was no surprise there. The market has been hot in late 2020 and early 2021, retail investors are very active and there were several very appealing IPOs. Bumble is riding that wave. And there are a few things I love about Bumble that make it better than other dating platforms.
Anthony: Investors were wise to buy in for sure, as the stock has surged well above its IPO price. What intrigues you most about Bumble right now?
Anna: It’s like a new “it.” A mystical tall, dark, and handsome who just moved in on your block. A fresh face, a new style, a celebrity crush who is suddenly within reach. Plus, women empowerment. You know what I mean? It’s like the Tesla of dating apps - with a female leader.
Anthony: Well, I’d say Match Group is the Tesla of dating apps right now...
Anna: This will be Bumble against the dating behemoth for the market share. Match Group owns Tinder, Match, and Hinge, while Bumble has itself and Badoo. But Bumble’s IPO has certainly pumped up interest and will drive up its user count.
Anthony: Hey you didn’t let me finish, I was going to say that Bumble is a better buy at the moment because of the upside. Sure, it would have been better to buy it at the IPO price but investors should swoop in and buy this as a long term play if they haven’t done so yet. More than 40 million users visit Bumble and Badoo each month.
Anna: How long do you think before Bumble outpaces Match? BMBL has already surged quicker than MTCH did at its IPO. It took Match a year to double its market cap. MTCH has come quite a long way from its initial pricing, trading today at over $160 per share compared to $15 at IPO, but I expect Bumble will hit this base much quicker.
Anthony: I agree, Bumble seems like a home run for investors. But to me it’s not about outpacing Match, rather it’s about continuing to grow and putting itself on a trajectory to profitability. It’ll be tough to surpass Match’s Tinder alone, which now has 66 million average monthly users.
Anna: It won’t be that hard. That’s 66 million people who are already accustomed to using dating apps and might as well try a fresh platform with a different take. According to a PNAS study, in the United States, online dating is the most common way for couples to meet. I would think the pandemic made the trend even more popular. Also, the IPO funds will boost Bumble’s global operations and may result in acquisitions. That de facto means more users.
Anthony: Also, as a Bumble shareholder you’ve gotta feel comfortable with founder and CEO Whitney Wolfe-Herd. She helped build Tinder and started a rival dating app that’s unique in letting women make the first move. It’s pretty remarkable what she’s been able to accomplish in less than a decade.
Anna: She is now the youngest woman to ever lead a company to an IPO and a self-made billionaire. She also led a number of charitable businesses, raising awareness of human trafficking, fair trade, and oil spills. Why wouldn’t you be comfortable with Wolfe-Herd?
Anthony: Well, if she was “corrupt” like CEO Jinyi Guo of Luckin Coffee (OTC: LKNCY) then you wouldn’t feel too comfortable. Stability matters.
Anna: Hey, I still think Luckin’s stock will yet rise to its pre-fraud levels and beyond. It looks like some scandals were still simmering inside the company as of late and it recently filed for Chapter 15 bankruptcy in the U.S., but it’s still China’s largest coffee chain. I’m with The Motley Fool’s Billy Duberstein on this, who just wrote a report saying it’s a good time to buy Luckin. This company will have a big comeback if certain of its employees stop their absurd pursuit of the new CEO.
Anthony: But I think we’ve had enough with busting Luckin’s chops this year, right? Might prove a nice place to meet a Bumble date though, but I wouldn’t know.
Anna: Why, you don’t use Bumble? Ah, you’re one of those patriarchal types? Don’t want the woman to make the first move?
Anthony: Ha. No, I mean I have never been to a Luckin Coffee. Anyway, back to Bumble.
Anna: Alright, that was my rant for Luckin. Now, let’s talk about Bumble’s financial prospects. For 2019, Bumble posted 35.8% year-over-year revenue growth. It has yet to post results for the full year 2020, but for the nine months through September 2020, it only recorded a 15% increase from the same period in 2019, which leads to suggest that its annual growth has slowed considerably.
Anthony: We also have to consider the pandemic environment. In the full year 2020, analysts are expecting Bumble’s revenues to jump 19% to $580 million, according to The Motley Fool. Then in 2021, as we hope to get back to normal, its revenues are expected to rise an additional 25% to $723 million. Then 2022 will hopefully be a big year.
Anna: I expect some big analysts to initiate coverage on Bumble soon and we may see some additional stock movement on that. In the meantime, users can go look for celebs who are on Bumble, including Sharon Stone and Zac Efron. (Not that I know anything about it.)
Anthony: Still waiting on a response from, Stone and/or Efron, I see?
Anna: Also, how cool that Bumble has a BFF mode?
Anthony:I know all about it. I am always relegated to the BFF zone, I’m surprised we haven’t matched yet.
Anna: Just remember, I have control over whether we even have a conversation.
Anthony: You know what else cool? Video and voice calling. That should help users get through the rest of the pandemic. Anyway, it’s a good time to buy Bumble. The stock has pulled back from around $79 per share earlier this week and is now trading at under $71.
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