Despite the skepticism surrounding Bumble’s (NASDAQ:BMBL) ambitious plan to leverage artificial intelligence (AI) to advance the dating sphere, the company has defied the odds and grown its user base significantly year-to-date, particularly in Europe and Latin America. With a new CEO at the helm, an ever-improving EBITDA margin and an attractive price point, Bumble’s stock is worth investigating further.
Bumble’s Expanding Horizons
Bumble Inc. is the parent organization of Bumble, Bumble For Friends, Badoo, Fruitz, and Official. The company aims to facilitate healthy and equitable relationships through its dating and social connection platform portfolio centered around women initiating connections. The company is also exploring additional revenue streams via its Premium+ subscription service, promising a quicker path for users to locate their matches.
BMBL is experiencing strong growth, particularly in Europe and Latin America, despite competition from dominant apps in the U.S., such as Tinder and Hinge. Furthermore, the leadership transition from founder Whitney Wolfe Herd to Lidiane Jones, the former CEO of Slack, brings a new level of credibility to the company.
Bumble has announced its intention to acquire Geneva, a group and community app designed to connect people based on shared interests. This strategic move aims to enhance the Bumble For Friends feature and broaden its scope from individual connections to larger groups and communities. The acquisition process is projected to conclude by the third quarter of 2024.
Analysis of Bumble’s Recent Financial Results
The company announced positive results in the first quarter of 2024, beating analysts’ expectations by reporting revenues of $267.78 million, surpassing estimates of $265.47 million, and demonstrating a 10.2% year-over-year increase. Revenue from the Bumble App has also increased by 11.1%, and revenue from the Badoo App and other sources has increased by 6.9%.
Furthermore, there has been a rise in the total number of paying users, reaching 4.0 million from the previous year’s 3.5 million. Even though the Total Average Revenue per Paying User (ARPPU) saw a slight decrease, the net earnings showcased a dramatic improvement with Q1 2024 net earnings worth of $33.9 million ,compared to $2.3 million loss in Q1 2023. Finally, earnings per share of $0.19 came in significantly higher than the estimated $0.07.
During the quarter, the firm repurchased $84 million in shares and announced an increase in the share repurchase program from $300 million to $450 million, making $209 million available for repurchases under the program.
Management is forecasting a Q2 2024 total revenue of between $269 million to $275 million, including Bumble App revenue of $218 million to $222 million. The Q2 Adjusted EBITDA is expected to go between $69 million to $73 million. For the full year ending December 31, 2024, Bumble projects total revenue growth of 8% to 11% year-on-year and a Bumble App revenue increase of 9% to 11% compared to the previous year. The company also anticipates a growth of at least 300 basis points in the Adjusted EBITDA margin.
What Is the Price Target for BMBL Stock?
Analysts following the company have mostly been bullish. For example, BofA analyst Curtis Nagle recently upgraded shares to a Buy from Neutral with a price target of $14, noting the company exceeded estimates in Q1 and looks for that trend to continue, which should drive multiple expansions.
Overall, Bumble is rated a Moderate Buy based on the recommendations and price targets assigned by 14 analysts. The average price target for BMBL stock is $14.57, representing a potential upside of 56.00% from current levels.
The stock has been highly volatile, with a beta of 1.82, and on a downward trend, shedding 41% over the past year. It trades at the low end of its 52-week price range of $9.52 – $21.06 and shows ongoing negative price momentum, trading below its 20-day (10.31) and 50-day (10.77) moving averages. Yet, the slide in price has driven the shares into deep relative value territory, with a P/S ratio of 1.45x, comparing favorably to the Software Application industry average of 5.11x.
Bottom Line on Bumble
Bumble has demonstrated impressive growth and resilience, thanks to its innovative technologies and strategic acquisitions. The company has successfully expanded its user base and flourished in a space consists of stiff competition. Despite some volatility and a recent downward trend in its share price, BMBL’s position in deep relative value territory may present an attractive entry point for potential investors interested in the online dating industry.
