Online dating app Bumble (BMBL) plunged Wednesday after delivering a weaker-than-expected revenue outlook as it struggles with an increasingly competitive dating app industry and changing consumer needs.
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BMBL stock sank by 18% in premarket trading on Wednesday to $6.65, having ended Tuesday’s regular session 4.3% lower at $8.10, putting them down 40% in the past year.
Bumble Fumbles Guidance
The company guided for revenue of $242 million to $248 million in the current quarter, representing a year-over-year decrease of 7% to 10%, and below Wall Street’s estimated $257 million.
For the Fiscal fourth quarter, revenues decreased 4.4% to $261.6 million, including the unfavorable impact of $2.7 million from foreign currency movements year over year. However, efforts to increase users seemed to show some promise as total paying users increased 5.3% to 4.2 million, compared to 4.0 million in the year-ago quarter.
It marks the first quarterly update since the firn announced the return of founder Whitney Wolfe Herd as CEO, a signal that company’s current turnaround plans were faltering.
“The company is executing on an exciting product roadmap for the year ahead, guided by our three strategic priorities: strengthening our ecosystem, delivering exceptional customer experiences, and enhancing our revenue strategy,” said outgoing CEO Lidiane Jones.
The strategy will see the company wind down two of its dating apps, Fruitz and Official, in the first half of the year.
Rival Match Group (MTCH) earlier this month replaced its CEO Bernard Kim after it reported a drop in fourth-quarter earnings and forecast sales below market expectations. The owner of dating apps Tinder, Hinge, OkCupid, and Pairs replaced the outgoing CEO with Spencer Rascoff, co-founder and CEO of Zillow (ZG).
Analysts Cut Price Targets on BMBL
In light of the earnings, analysts have taken a dimmer view of the stock. Citi analyst Ygal Arounian lowered his price target on the stock to $6.80 from $8, while Piper Sanlder went from $8 to $7, with both maintaining Hold ratings.
Is BMBL a Good Stock to Buy?
Overall, Wall Street has a Hold consensus rating on the stock, based on four Buy, 11 Holds and one Sell. The average BMBL price target of $7.54 implies over 7% downside potential from current levels, although this could be subject to revisions in light of the earnings update.
