With Women’s History Month in full swing, investing in stocks that empower women seems like a logical choice. One such company is Bumble, the dating app that puts women in control of starting conversations in dating matchups.
Bumble has been publicly traded for over two years but hasn’t performed well in the stock market. Despite its women-centric approach, the company needs to do more to turn things around. However, there are still opportunities for growth and potential returns for investors willing to hold shares for years.
Bumble’s Portfolio of Apps
Bumble isn’t just a dating app but a company that owns multiple apps in the online dating world. Bumble also has ownership of Badoo, a popular online dating platform in Europe and South America.
Both are leaders in the industry but have been moving in opposite directions lately. While Bumble continues to perform well, Badoo has been struggling.
Bumble’s Growth
Bumble’s namesake app has been performing well, with substantial user and revenue growth. It added a half-million new paying users in 2022, and its sales jumped 31% year over year. Bumble’s total paying users grew by 10% year over year in 2022 to 3.2 million. The company’s total revenue for the year increased by 18.7% to $903.5 million, and its average revenue per user came in at $23.03, almost 7% higher than the previous year.
Fruitz, Bumble’s France-based app that targets Gen Z, allows users to match with like-minded people by assigning fruits to the kind of relationship they’re seeking. Although Bumble owns multiple dating apps, its namesake app is the primary driver of growth and revenue.
The Opportunities Ahead
The online dating world is highly competitive, with Match Group being the industry’s biggest name, owning websites and apps such as Tinder. However, Bumble has been growing its user base across all of its apps at a faster pace than Match Group. In 2022, Match Group’s 16.1 million payers dropped by 1% year over year. Bumble, on the other hand, continues to grow its user base and revenue.
Although Bumble has been growing, it isn’t consistently profitable. Last year, it reported a net loss of $114.1 million, compared to the net income of $281.7 million in the previous fiscal year. The net loss was primarily due to a non-cash impairment charge of $141 million incurred in the fourth quarter related to the company’s decision to cease operations in Belarus and Russia last year.
The Good News
Bumble’s women-centric approach, combined with the network effect, has been driving growth. The more potential matches there are on the platform, the more attractive it becomes to future users. Bumble’s focus on women also extends to its Bumble BFF app, which has become one of the most popular friendship-finding apps.
With the prevalence of loneliness in countries like the U.S, Bumble management has high hopes for this service. As per a survey cited by Bumble, a significant 60% of Americans faced loneliness between 2018 and 2020, and this percentage surged to 75% in the case of younger individuals.
Badoo’s Future
While Bumble is growing, Badoo’s future is uncertain. The company expects the app to continue losing users in 2023, but it is working to stabilize things and increase monetization on the platform. Although Badoo has been struggling lately, it remains one of the top three dating apps in dozens of markets.
In summary, while Bumble has been struggling in the stock market, its namesake app has been performing well and continues to show promise for future growth. With a women-centric approach to online dating, Bumble has been able to build a competitive advantage through the network effect. By offering a platform with a large pool of potential matches, it becomes more attractive to future users. Bumble’s main growth driver, its namesake app, has been consistently growing its user base and revenue, with a half-million net new paying users added in 2022 and sales jumping 31% year over year.
