Street Initiates Coverage of Bumble (BMBL) with Mixed Ratings

Wall Street has initiated the coverage of recent Bumble (NASDAQ: BMBL) with mixed ratings. Analysts at Cowen, Jefferies, Stifel, and Citi are leaning positive with “Buy” or equivalent ratings, while their colleagues at BMO, Goldman Sachs, JP Morgan, Raymond James, and Morgan Stanley initiating at “Neutral” or equivalent.

BMBL started trading on the NASDAQ stock exchange on February 11. It opened the first trading day up 77% at $76 per share, although it priced its shares at $43 per share, above its original target range of $37 to $39.

A day later, BMBL stock soared to print a record high at $84.80 before plunging to the low $60s. On Friday, the BMBL closed at $61.65 to push the monthly tally to about 8.5% in the green.

Founded in 2014 by CEO Whitney Wolfe Herd, the company operates a “freemium model,” meaning its users are matching for free. It makes money from in-app purchases and different subscription offerings.

Cowen started the coverage of BMBL with an “Outperform” rating as its analyst John Blackledge believes the company is poised to benefit from strong secular offline-to-online dating trends.

Moreover, he expects BMBL to grow its leading female-first brand in new geographies. Blackledge set a price target of $70.00 a share.

“We expect positive secular tailwinds for the Online Dating industry to continue for many years to come and Bumble should be a beneficiary and driver of the cont'd shift. Bumble’s key points of differentiation include its flagship dating app, Bumble, given its strong female first brand and complementary app Badoo, with both benefiting from a fully integrated tech backend, which creates efficiencies and strong test & learn capabilities,” the analyst wrote in a note sent to clients.

According to Cowen’s proprietary surveys of 10K consumers across the US, UK, Germany, and Japan, there is a trend of soaring use of showed surging use of Mobile dating apps in December last year vs. prior periods.

“We expect the major brands in these markets to enjoy the surge in usage and ultimately monetize rising users as we emerge towards a new normal,” Blackledge adds.

Similarly, BMO analyst Daniel Salmon estimates the global online dating total addressable market (TAM) to be $6.3 billion in the last year. The industry is expected to grow at a compound annual growth rate (CAGR) of 14.1% to $23.6 billion in 2030.

“Consistent with our positive view on the end market and business model, Bumble offers double-digit revenue growth, a rising margin profile, an appropriately levered balance sheet, robust FCF generation that we expect to be largely deployed on growth initiatives (no buybacks or dividends modeled). Bumble’s female-first approach created both differentiation in the category, and the opportunity to build a broader brand, and non-dating opportunities represent free option value.

Although he shared positive comments on BMBL and its business model, Salmon started the coverage with a “Market Perform” rating and a price target of $65.00 per share.

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