In the realm of dating app stocks, Match Group (NASDAQ:MTCH) had a monopoly for a while. But now, Bumble (NASDAQ:BMBL) is posing a major threat to Match Group’s hegemony and investors should give Bumble stock serious consideration.
Founder and CEO Whitney Wolfe Herd launched Bumble back in 2014 with an ambitious vision to upend traditional dating norms. By encouraging women to make the first move, Bumble turned the tables on gender-role assumptions.
Unless you already own a ton of Match Group shares, Bumble stock could actually be a pretty good portfolio diversifier. Yet, there’s another angle worth considering – an indirect play on the novel coronavirus vaccine rollout.
Could this stock be an unexpected but potentially lucrative recovery trade? Only time will tell, but as they say, you have to accept the risk if you want the reward.
A Closer Look at Bumble Stock
The initial public offering (IPO) price for Bumble stock was first assigned a range of $28 to $30, which was later increased to a range of $37 to $39.
Then, the IPO price was raised to $43. The company sold 50 million shares at that price, raising $2.2 billion in the process.
The stock debuted for public trading on the Nasdaq Exchange on Feb. 11, and rallied an incredible 76% on that first day. And the next day, the share price increased by as much as 8.8%.
So far, Bumble stock’s 52-week high price is $84.80. That’s nearly double the IPO price. On the morning of March 1, the share price was close to the $69 area.
Value-focused investors might not like the fact that the current stock price is so much higher than its IPO price. Still, at least the stock isn’t trading at its peak price of nearly $85.
Succeeding Despite Competition
First, it should be noted that Bumble owns two location-based social discovery apps: Bumble and Badoo.
As I alluded to earlier, Bumble’s primary competitor is Match Group. That company owns Tinder, Hinge, Match and other services.
Today’s millennials and zoomers are generally aware of how popular Tinder is. It might be tempting to assume that Tinder, and therefore Match Group, has the dating app market cornered.
Yet, that’s not necessarily the case. As of Sept. 30, 2020, Bumble reported having around 42 million monthly active users across its dating apps.
That’s quite a large user base. Moreover, approximately 2.4 million of those users paid for premium features. Those features include Bumble Boost and Bumble Premium.
Furthermore, Bumble reported revenues of around $376.6 million between Jan. 29 and Sept. 30 of last year. Clearly, this company is flourishing even with the competition from Match Group.
Recovery and Romance
The most obvious angle with Bumble as an investment is that it’s different from Tinder.
More specifically, the Bumble app can offer an enhanced sense of safety and control to women by allowing them to make the first move.
That’s undoubtedly an important consideration. Yet, to that I would like to add the recovery trade angle.
The U.S. government has given various levels of regulatory approval to at least three different major Covid-19 vaccine manufacturers.
Meeting up and making romantic connections simply wasn’t a sensible option for many folks in 2020. Today, however, lockdown restrictions have largely been eased and the vaccine rollout has calmed some people’s nerves.
Is the atmosphere ripe for romance now? Young folks nowadays seem to love apps and crave human connection. Not to generalize too much, but the growth of the app-facilitated dating niche could be explosive in 2021.
InvestorPlace web content producer Sarah Smith summed up my sentiment on this topic nicely: “… as the vaccine rollout continues and the world reopens, we could see a rebound in casual dating. Such a rebound would benefit top platforms like Bumble and Badoo.”
The Bottom Line
I won’t try to pretend that Bumble stock is cheap. Admittedly, the current share price is much higher than the IPO price.
Nevertheless, the stock could be a worthy portfolio diversifier as well as a potentially profitable wager on the post-pandemic reopening – and the return of romance.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.