Bumble Inc (BMBL) Is Buzzing Today After An Analyst Upgrade; Valuation Starting To Look Attractive

2:38 pm Monday, November 29th, 2021

Bumble (NASDAQ:BMBL) is buzzing today after being upgraded to Outperform from Market Perform at Raymond James. After the company reported a series of earnings results with stagnant sequential total paying user growth and somewhat light guidance, BMBL shares got stung pretty hard. Shares have fallen by over 50% since BMBL’s February IPO and trade about 20% below the IPO price of $43.

However, this extensive crash has started to make the online dating company, which also owns the Badoo dating app, look relatively attractive. BMBL trades around 4.6x expected FY22 sales, a nice discount relative to its main rival, Match Group (MTCH), which trades at 10.4x FY22 sales. Furthermore, when joined with a brand that is more focused on safety that puts women first and strong secular tailwinds as mobility increases globally, BMBL’s massive pullback this year looks like a nice entry point for buy-and-hold investors.

A significant tailwind for BMBL is the demand to go out once again after long periods of lockdowns and COVID restrictions during FY20. The uptick in mobility could be a double-edged sword, as increased opportunities to socialize and meet in-person could subdue user trends in the online dating space, but we think the positive impact that the easing of COVID restrictions has had on dating interest overall outweighs that headwind. For example, in Q3, BMBL saw revenues jump 24% yr/yr to $200.5 mln, following solid yr/yr growth of +38% in Q2 and +115% in Q1. Although growth has slowed throughout the year, BMBL expects Q4 revs to bounce back moderately, to around $208-211 mln, or about 27% yr/yr growth at the midpoint.

Another tailwind comes from BMBL’s relaunch of its BFF offering; the offering, which focuses on helping users find new friends, represents a strategy by the company to retain and grow its user base. Early results from the new Bumble BFF version already show demand for discovering friendships as monthly active users (MAUs) grew 45% yr/yr in Q3.

Finally, BMBL’s international expansion remains its primary focus and should provide a lasting tailwind. For example, in Q3, BMBL’s Mexico and Brazil markets saw paying users double yr/yr. In addition, in regions slower to recover from the pandemic, such as India and Indonesia, BMBL started to notice an uptick in growth as mobility began coming back in Q3, boding well for the company going into 2022.