Bumble: Still Feeling the Love

© Reuters. Bumble: Still Feeling the Love

With pandemic-related restrictions and reduced social contact, the world became an interesting one for dating apps. On the one hand, meeting folks in person became increasingly difficult. With dinner and a movie out of the question, and the club scene completely shut down, what were those looking to get out there to do?

That said, online dating platforms such as Bumble (BMBL) helped to fill the void. These platforms have provided those looking for love for a way to do so, safely.

However, with the pandemic starting to fade into our rearview mirror (kind of), expectations are that dating could really pick up in the coming quarters. Dating apps like Bumble have a strong pandemic reopening catalyst underpinning their rise right now. Indeed, investors have reason to be bullish on this sector. I am bullish on this stock.

Currently, Bumble is the second highest-grossing online dating app, trailing only behind Match Group’s (MTCH) Tinder. Although dating in the social scene is set to gather momentum, Bumble might still see considerable growth. 

Bumble's stock price rallied on August 12, right after the online dating platform posted an impressive second-quarter result. The growth rate and stock valuation of Bumble seem to be quite attractive. However, the spread of the Delta variant can act as a hurdle in the prospects of the company. (See Bumble stock chart on TipRanks)

Bumble is Expanding its Base

Bumble’s core app has secured a high-growth rate in the past couple of years. The online dating app is popular for letting female users make the first move while communicating with a potential partner. 

Notably, Bumble's market share in the U.S. surged from 10% to 19% between 2017 and 2020. This has positioned Bumble right behind Tinder, which has a current market share of 40%. 

Bumble is also planning to expand its offerings in major overseas markets like India. Monthly active users in India jumped around 60% on a year-over-year basis in the second quarter. It has stated that the company noticed higher registration growth, more customer reactivation and improvement in customer engagement during Q2. 

The online dating app also wishes to improve and expand its female-oriented features. These features include Bumble BFF (meant for platonic friendship) and Bumble Bizz (for business connections). According to Bumble CEO Whitney Wolfe Herd, more than 10% of users have been using the BFF feature. 

She also adds that the average time users spent on the app rose 10% during the second quarter. Interestingly, women users spent 24% more time on average than men. 

High Revenue and Growth

Bumble’s recent quarterly report has been quite robust. The dating app posted revenue growth of 38% on a year-over-year basis. Q2 revenue stood at $186.2 million, which exceeded analyst estimates by $7.5 million. The revenue generated from its namesake app soared 55% to touch $127.3 million. Moreover, the app registered a spike in its paying users by 36%, to 1.47 million. 

Badoo, which is an older app popular in Europe and Latin America, also witnessed revenue growth of 11%. In addition, the number of paying users moved up to 1.45 million. 

Bumble is much smaller than the Match Group (NASDAQ:MTCH), which operates Tinder, Hinge and several other popular apps. However, it is growing more quickly than the Match apps. The company has ramped up its guidance for revenue growth from 29% to 31% for the entire year. The previous guidance ranged between 24% and 26%. 

Is Bumble Stock Worth Buying?

Bumble comes with high growth potential, along with an attractive valuation based on this growth. However, it is a reopening play. The spread of the Delta variant across the world shows that the pandemic is far from over. Increasing COVID cases might bring back previously imposed restrictions. 

Analysts believe the new variant might actually impact Bumble’s core business while affecting its new restaurant business. Although Bumble is poised for an impressive growth trajectory, the stock might not perform as decently as expected. 

What are Analysts Saying about BMBL Stock?

As per TipRanks' analysts rating consensus, BMBL stock is a Strong Buy. Out of 5 ratings, there are 4 Buy recommendations and 1 Hold recommendation. 

The average BMBL price target is $66.80. Analyst targets range between a low of $54 per share to a high of $75 per share. 

Bottom Line

The Delta variant might pose a significant threat to Bumble. However, its core business strategy is robust, and it is focusing on expanding its global presence. These factors should be enough to encourage investors to dive into this stock. 

Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article.

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