Bumble IPO: Everything you need to know about Bumble

Bumble has become the latest tech stock to go public, but will the dating company be able to charm investors? We tell you everything you need to know about Bumble and its IPO.

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When was the Bumble IPO?

Bumble listed on the Nasdaq on Thursday February 11.

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Bumble shares: What was the Bumble IPO price?

The Bumble IPO was priced at $43 a share. The company issued around 50 million new shares and raised $2.15 billion. This meant it started life as a public company with a valuation of around $8.2 billion.

The company issued more shares than originally planned under the IPO and achieved a better price than the expected price range of $37 to $39.

Bumble is using the proceeds from the IPO to repurchase shares from early investors and to pay-down debt. Notably, pre-IPO investors retained around 97% of the company’s voting rights after it goes public.


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What is Bumble?

Bumble is known for its name-sake dating app that ‘puts women in control’ and it also owns another popular matchmaking brand named Badoo. Combined, over 42 million people use the apps every month, with over 150 million messages being sent daily among its members, which it refers to as ‘the hive’.

It was founded in 2014 by Whitney Wolfe Herd, who is at the helm today, ‘to empower women to build healthier and more equitable connections in an effort to improve relationships for everyone’. The ambition is to become a ‘global women’s brand’.

The main unique aspect of Bumble app is that it puts women first by requiring them to instigate the chat with any matches that tickle their fancy, compared to a rival like Tinder and many other apps that allow either person in the match to spark a conversation. Badoo champions the slogan ‘date honestly’ and offers a platform to be ‘the real, unapologetic you’.

Bumble worked with Badoo when it was first starting out to utilise its scale and expand its app, and now the pair operate under the same umbrella. The two apps are now available in 25 different countries and in 51 different languages.


How does Bumble make money?

The Bumble and Badoo apps both make money using a freemium model. This means they are free to use but a small subset of users subscribe or use in-app purchases to access all the features available. For example, it offers ‘Bumble Premium’ and ‘Badoo Premium’ subscriptions that last for as short as one-day and stretch all the way to a lifetime membership. Extra features that can be bought include camera filters, the ‘SuperSwipe’ to really show your interest, and the ability to browse in incognito mode.

The two apps are among the most popular in their genre on app stores. They are both among the highest grossing lifestyle apps on Apple phones in many countries around the world. The two apps made $488.9 million in revenue in 2019, up 36% from the year before, and that has continued to grow in 2020 and this year. Notably, advertising revenue only makes up a tiny fraction of overall income, with the bulk coming directly from users.

It had 2.4 million paying users at the end of September 2020 – 1.1 million on Bumble and 1.3 million on Badoo. That represents a fraction of its 42 million monthly users.

Bumble KPIs

9-months to Sept 2019

9-months to Sept 2020

Bumble paying users

843,900

1.1 million

Badoo paying users (and others)

1.2 million

1.3 million

Total paying users

2.05 million

2.44 million

Bumble App APRU

$26.78

$25.72

Badoo and other APRU

$13.53

$12.54

Total ARPU

$18.97

$18.48

 (Source: Bumble prospectus)


Is Bumble profitable?

Bumble first turned a profit in 2010, four years after it was founded, and says its financial model is underpinned by ‘a rare combination of growth, scale, strong profitability and cash flow generation’. It turned a net profit of $85.8 million in 2019, turning from a loss the year before. However, it turned to a loss in the most recent period that ended on September 30, 2020.

Bumble Earnings

2018

2019

Jan 29- Sept 30 2020

Revenue

$360.1 million

$488.9 million

$376.6 million

Operating profit

($16.2 million)

$93.3 million

($53.7 million)

Net earnings

($23.7 million)

$85.8 million

($84.1 million)

The most recent loss was caused by significantly higher general and administrative costs as it scales up the business. Bumble has warned that its costs will continue to grow as it develops new products, expands into new markets and promotes its brands, which will place pressure on the company to maintain growth and its margins.


Does Bumble pay a dividend?

Bumble has paid dividends as a private company, paying out 30 cents per share in 2018 and 18 cents in 2019. It has not confirmed whether it will be a dividend paying stock. Although it has been profitable and cash generative, it may decide to spend more on investing in future growth rather than distributing cash to shareholders in the near-term.


What is the outlook for Bumble shares?

There has arguably never been a better time for a tech company to go public. There is a large appetite for tech stocks as the shift online has accelerated during lockdown and tech has become so vital in getting humanity through the pandemic.

Based on the performance of the string of new tech listings over the last year, Bumble could well be another company to find higher ground after it has listed. A flurry of tech stocks, from AirBnB and DoorDash to Palantir and Snowflake, have all jumped in value since going public. The fact Match.com boasts a market cap of $41 billion suggests there is room for upside based on Bumble’s initial valuation.

However, it is important to remember that IPOs can be volatile as shares first hit the market and investors try to settle on an initial valuation.


What is Bumble’s strategy?

Bumble believes there is still significant room to grow its dating apps but also sees considerable opportunity in expanding into new areas.

We believe there is a significant opportunity to extend our platform beyond online dating into healthy relationships across all areas of life: love, friendships, careers and beyond. By empowering women across all of their relationships, we believe that we have the potential to become a preeminent global women’s brand,’ Bumble writes in its prospectus.

Its priority will be growing the Bumble and Badoo apps. Although dating apps feel commonplace today, especially among younger users, it is still early days for this nascent industry. Plus, the single population is growing, online dating is becoming more acceptable by the day, and more people are more willing to pay to give their love life a boost.

North America is the key battleground for Bumble and Badoo, which has previously played second-fiddle, will see more investment to get the brand out there.

Beyond that, the Bumble app will continue to rollout to new countries to build on its latest expansions in Europe, Asia and Latin America. The fact the company is only live in 25 countries demonstrates the number of new markets available.

It also wants to continue investing in its platforms and intends to do this using as much machine learning and data science that it can. This, it hopes, will allow it to acquire new users more efficiently, personalise people’s experiences better, and improve the overall user experience. It will also look to better monetise its apps by experimenting with new features and price points.

In the longer term, the company hopes to build apps that help people, particularly women, across ‘all areas of life: love, friendships, careers and beyond’. With this in mind, it is aiming to break into areas like health and wellness, travel and leisure and finance.

The first test will be with its new developments. One is an app aimed at forging platonic relationships, Bumble BFF, and another focused on business networking, Bumble Bizz.


Who are Bumble’s competitors?

Investors always look out for competitors to compare how a company is performing relative to the wider market, and Bumble’s number one rival will be Match.com.

Match.com owns a number of other dating apps other than its namesake, including Tinder, the most popular dating app in the US and other major markets. Other brands in its portfolio include Plenty of Fish, okcupid and Hinge. Investors will be eagerly comparing how quickly both companies are growing and monetising their platforms.

However, there are new rivals emerging over the horizon, and ones that should have both Bumble and Match.com nervous. Social media platforms are also eyeing the room to expand into the dating arena and Facebook – already tapped into a staggering 2.8 billion people worldwide – has already introduced its own dating feature to its platform in North America, Europe and elsewhere.


Who are the directors of Bumble?

There are many publicly-listed companies, especially in the tech space, that are known for their founder and Bumble is no exception. Chief executive Whitney Wolfe Herd previously worked on Tinder before going on to create Bumble.

The company’s other board members also have significant experience, with its president Tariq Shaukat having previously been the president of Google Cloud and chair Ann Mather currently sitting on the board of Alphabet, Google’s parent company.

Position

Name

Founder and CEO

Whitney Wolfe Herd

President

Tariq Shaukat

Chief Financial Officer

Anuradha Subramanian

Chief Legal & Compliance Officer

Laura Franco

Chair

Ann Mather


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