Bumble Hits A Speed Bump—Why The Dating App’s Shares Are At A Low Since Its Buzzy IPO

Bumble has lost a lot of love from shareholders this month. 

Shares of the dating app company are down more than 20% after a quarterly earnings report on November 10 gave some investors cold feet. The ensuing selloff pushed  the stock to the lowest point since its buzzy IPO in February—and shaved more than $200 million from the fortune of founder and CEO Whitney Wolfe Herd. 

The 32-year-old Wolfe Herd became the world’s youngest self-made woman billionaire, worth $1.5 billion, when Bumble went public earlier this year; shares closed that day at $70.31. She owns 21% of the company, plus she has about $100 million from the sale of a portion of her ownership to private equity firm Blackstone in 2020, according to her family office. That makes Wolfe Herd worth just over $1 billion at  Friday’s closing price of $36.38 per share. 

So what has investors ghosting Bumble (at least for now)?

For the first time since its IPO, the company posted a decline in overall user growth in its third quarter results, with total paying users dropping to 2.87 million in the three months through September, down from 2.93 million in the prior quarter.

Most affected was Bumble’s other dating app, Badoo, which is popular outside the U.S.. Badoo’s usership fell more than 8% compared to the prior quarter and its revenue declined 3% year-over-year, to $57 million. Wolfe Herd attributed the drops to the ongoing influence of the pandemic overseas, along with a payment issue affecting Android devices that she said management is working to fix. 

“As we said last quarter, Badoo operates in a large number of markets where the pandemic is still a significant challenge,” Wolfe Herd said in an earnings call. “And the core Badoo user community, which is predominantly in the urban middle-class segment, continues to face economic pressures from [Covid-19].” 

But JPMorgan analyst Cory Carpenter, who closely tracks the performance of dating apps, says the greater point of concern was actually Bumble’s core product, its namesake women-orientated dating app, which didn’t tally nearly as many new paid users as expected: 60,000 vs. 87,000. 

The shortfall was only made worse by the record 800,000 new paid customers reported by Match Group for its dating app rival Tinder the week prior. Though a much larger company and servicing a more international market, Carpenter explains Tinder’s results “raised the bar for Bumble.” “Match does X, so we expect Bumble to do Y,” he says.

Nonetheless, Carpenter labeled the damage to Bumble’s stock “overblown.” The Bumble app still saw its revenue rise 39% year-over-year, to $142.5 million. Overall, the company came in ahead of Wall Street expectations, too, with total revenue of $201 million for the quarter—and it raised its full-year revenue forecast as a result. Its net loss was $10.7 million, down from $22.8 million in the year earlier, but still more than double analysts’ predictions of a $4.7 million loss.

“They’re trading at a pretty significant discount to Match from a valuation perspective,” Carpenter says. “They should do well with the reopening as people are willing to pay more.”

Bumble raised $2.2 billion from its public debut earlier this year. Shares opened at $76 per share, well above its IPO price of $43, bringing its valuation to about $8.6 billion. But investor enthusiasm hasn’t reached the same level since. Shares have been steadily declining from $59.94 in early September before reaching their lowest point since the IPO this month. 

Wolfe Herd addressed the tumultuous prices during an interview at the Forbes Under 30 Summit in October, explaining she is “not obsessed with the stock.” “I’m obsessed with the customer, the team, the innovation we’re planning for the future,” she said, adding: “If you’re trying to get to that next milestone, don’t focus on the short term.” 

Wolfe Herd famously launched Bumble in 2014 after a dramatic departure from Tinder, where she was one of the company’s earliest employees. She sued her former employer for sexual harassment and discrimination in a case that was quickly settled (Tinder denied any wrongdoing) and then started Bumble with the help of London-based Russian billionaire Andrey Andreev.

A Forbes investigation in July 2019 found a toxic, misogynistic environment at the London headquarters, according to former employees. Andreev denied specific instances of harassment against female employees, but days after the Forbes article published, he announced an investigation into the alleged behavior.  

In November 2019, private equity firm Blackstone swooped in to buy a majority stake in  Bumble/Badoo parent MagicLab in a deal that valued the group at $3 billion; Blackstone purchased Andreev’s stake, while Wolfe Herd held onto the vast majority of her ownership. 

With Blackstone’s backing, Wolfe Herd navigated the company to its public offering amid the depths of the pandemic. Now she needs to figure out how to get more paying customers to use the company’s dating apps, in both Europe and the U.S.