Bumble Could 'Close Value Gap' To Tinder's Parent Company: Expert Predicts 45% Upside On Heels Of Q1 Earnings

Dating and networking company Bumble Inc BMBL released its first-quarter results on Wednesday, reaffirming its strong performance and outlook for 2024.

The Austin, Texas-based company reported:

• Revenue of $268 million, a 10% year-over-year (YoY) increase, which exceeded management’s guidance.
• Adjusted EBITDA stood at $74 million, a 25% YoY increase, surpassing expectations.
• A 171.43% surprise on earnings per share (EPS)
• 42,000 net new users, slightly exceeding management’s guidance of 30,000 to 40,000.

Also Read: The Analyst Verdict: Bumble In The Eyes Of 6 Experts

The Analyst: JPMorgan’s Cory A. Carpenter has an Overweight rating on Bumble stock with a price target of $17 a share.

The price target represents a 65.5% upside from the price of the stock at the time of review, i.e. $10.27. It is based on 8x their 2025E adjusted EBITDA of $389 million, “in-line with MTCH's trading multiple.”

The Thesis: According to Carpenter, the standout performer was the Bumble app. Its new user count is particularly significant. Bumble reset its growth expectations in the previous quarter due to challenges in the U.S. market.

Upside: Despite continued sluggishness in top-of-the-funnel trends, management remains optimistic about future growth, especially following the relaunch of the Bumble app. Initial results post-relaunch are promising, with nearly half of new users engaging with Opening Moves and an uptick in chats and matches.

While investors have shown skepticism, leading to the stock trading at 5x 2025E adjusted EBITDA, there is potential for significant upside.

According to Carpenter, the company’s shares have “meaningful upside potential” and should management execute well on the product side in the coming quarters, we could see Bumble “closing the value gap” to Match Group Inc MTCH, implying a 45% upside.

Bumble Has Not Experienced Tinder-Like Weakness

Looking ahead, Carpenter expects the dating app net adds to peak in the third quarter following the relaunch and typical seasonal patterns, with management estimating 350,000 to 400,000 net adds in 2024. Despite challenges faced by Tinder in a-la-carte (ALC) revenues, Bumble has not experienced similar weaknesses, with ALC accounting for approximately 20% of revenue, he noted.

Bumble faces short-term challenges, but Carpenter remains optimistic about its long-term prospects, especially if management continues to execute effectively. With a strong focus on product improvements and a successful relaunch, Bumble could potentially deliver significant returns for investors in the coming quarters.

BMBL Price Action: The company’s stock is currently up 6.28%, trading at $10.92 per share.

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