With an impressive debut on the stock market, Bumble (NASDAQ:BMBL) has become the talk of the town. Before the initial public offering (IPO) in February, underwriters had priced Bumble stock at $43, and the stock opened at a smashing $76. It hit a high of $85 on the second day of trading and is changing hands around $62 today.
Bumble stock has been drifting on the downside lately, which is why this is your chance to get the share at a cheaper price and add it to your portfolio. With that in mind, let’s take a look at the two drivers behind the investment case for Bumble stock.
Strong Future Outlook
Bumble stock is a long-term investment that will certainly pay off. There has never been a time when online dating was as popular as it is today. The current situation of a pandemic where social gatherings are impossible to come by has led to a surge in online dating.
Founded in 2014 by Whitney Wolfe Herd, Bumble has a unique approach to pair up its users. It allows female users to make the first move, making it a safe space for women. It has also launched Bumble BFF and Bumble Bizz, which are ideal for friendships and professional networking, respectively. The app offers everything in one place — friendship, love and business connections. It has challenged the supremacy of Tinder in the European and North American market.
The company is the number-two dating app in the U.S., and holds 19% of the market share in the revenue. Furthermore, its market share has nearly doubled since 2017. It has more than 42 million active users across the world with 1.7 billion “first moves.”
Out of Bumble’s 42 million monthly active users, about 6% are paying users. Revenue hit $488.9 million in 2019, which is a 36% rise from the previous year, and it is only going up in 2020. In the first nine months of 2020, the company clocked $415 million in revenue. Considering the number of singles across the world, there is tremendous potential to grow. And with an increase in paying users, the revenue will only go upward.
Pandemic-Related Surge
The pandemic has done a lot of good for Bumble, and there was never a better time to launch an IPO. Due to the pandemic, more people are spending time on dating apps looking for love. As per reports, there was a 12.6% year-over-year increase in the active users in Q4 2020 on eight of the top dating apps in the country. This is a huge jump — in fact, it’s the biggest in nearly two years.
Additionally, time spent on such apps has gone up to 13.4% in the fourth quarter from 4.1% in the same period the prior year. A rise in interest in the apps has led to more downloads, and if the present situation continues, the only way to find love will be online. For Bumble, there has been a 25% increase in usage during the pandemic.
Contributing to that spike in usage is Bumble’s in-app video-chat feature, which saw a spike of 93% between the last two weeks of March last year. No other dating apps have the video-chat feature, which is another reason Bumble is a top choice for users. With limited physical connections, the app is meeting the demand for video chat through this feature, as users do not need to share personal contact info like phone numbers or email addresses to communicate.
Many of us will not be able to socialize or move out of our bubbles anytime soon, and this is when we might look for love online. Besides potential romantic partners, Bumble also offers an opportunity to build friendships and make professional connections. One must also remember that in-person dating is expensive, and now is not the time to hang out at the bar. For many, the best thing to do now is to open the app and make a move.
The Bottom Line on Bumble Stock
If you missed out on investing in Bumble IPO, now is the chance to add it to your portfolio. The stock will go up due to the pandemic, and it will generate strong returns in the long term. There is so much to look forward to for the company, especially considering the fact that it puts women first.
Furthermore, the company reports Q4 results on Mar. 10. The results will likely give investors more perspective about the potential of BMBL stock.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.
