Bumble (BMBL)went public last months in a highly anticipated initial public offering (IPO). The company has shaken up the online dating world with its new APP, and it has a lot of potential for massive growth. Bumble's APP stands out from the field because it's tailored toward women, who send the first message and have all the control over the interactions.
With a recent big dip on tech stocks, Bumble at the time of this writing is trading roughly 15% below its opening price, so there hold be plenty of room for growth. Here's why the company has what it takes to thrive through market volatility and deliver lots to love for long term traders.
Chief Executive Whitney Wolfe Herd founded Bumble in 2014 after having been a co founder of Tinder, bringing dating app experience and a new vision for how the market could grow.
While men typically send the first message on most dating apps, Bumble's attraction is that women making the first move. The APP also allows users to search for friends, and for users to seek potential business connections - some competition for Linked In perhaps.
Bumble's dating app is well differentiated, and its strong brand and highly engaged user base point to unfolding long-term growth opportunities. The service is currently the second-most-used dating app in the U.S., trailing Tinder, and it stands a good chance of top spot bu 2023.
The business ended the third quarter with roughly 42 million monthly active users, and total paying users across its platforms rose 19% year over year to reach 2.4 million. That's still far behind the 10.9 million average quarterly subscribers that Match Group registered in its fourth quarter, but Bumble has a large addressable market to grow into.
Bumble has big opportunities for growth as it attracts more users to its platform and increases revenue per user. The company has already built a strong brand in the U.S. and European markets, but it still has plenty of growth potential in other areas and as dating increases as the world emerges from COVID19.
Bumble's forward and trailing price-to-sales multiples actually look decent, and the business should be able to shift into consistent profitability by year end. The company did almost $500 million in sales in 2019 and posted a profit of $85 million, and there's a good chance it will report the same in 2020. The company is worth around $7 billion, trading at roughly 14 times 2020 sales which I think is pretty good. managed to grow sales 36% and post a significant profit in its fiscal year before the pandemic hit. Growth will be slower in the near term, but momentum should pick back up as pressures from COVID-19 ease.
In summary, the stock is still fresh off its recent IPO, and investors should expect volatility, but in 12 months we predict the stock to increase by 50%.