Bumble Shares Plummet: Uncertainties Following Revenue Forecast and Analyst Downgrade

Following a reduced annual forecast for revenue growth, Bumble shares plummeted by 35% in pre-market trading. The women-focused dating app provider now expects revenue growth between 1% and 2%, compared to the previous forecast of 8% to 11%. Revenue expectations for the second quarter were also missed. To stabilize business operations, Bumble will slow down certain monetization initiatives, including the expansion of the Premium Plus subscription, which was originally planned for the second half of the year. This adjustment in the forecast has raised concerns about user acceptance following the recent relaunch of the Bumble app and the revamping of the Premium Plus offering, as user spending behavior remains sluggish. Despite improvements in user retention and an enhanced experience for women, the relaunch did not have the hoped-for effect on acquiring new users and monetization. J.P. Morgan analysts downgraded Bumble from “overweight” to “neutral” due to these developments, emphasizing that restructuring efforts typically take time. In the second quarter, Bumble's average revenue per paying user decreased to $21.37, compared to $23.23 a year earlier. Despite these challenges, 23 brokerage firms continue to rate the stock as “buy”, with a median price target of $12.50 indicating a potential upside of 55% over the next 12 months. For comparison, Bumble’s price-earnings ratio stands at 7.91, significantly lower than competitor Match Group’s ratio of 15.15.