On Monday (NASDAQ:MNDY), Susquehanna retained a Neutral rating on Bumble Inc. (NASDAQ:BMBL) but increased the shares price target from $6.00 to $8.00. The firm's analyst cited the ongoing transformation of the core Bumble App as a significant focus, though the business is still considered to be in turnaround mode.
Despite management's optimism about the company's direction, the analyst highlighted that it is early in the process and that substantial results will take time to materialize.
Bumble's third-quarter performance showed a top-line deceleration, with revenue coming in at $274 million, marking a 1% year-over-year decline. This slowdown was a four-point deceleration from the second quarter but was slightly above both the analyst's and the consensus estimates.
Revenue from the Bumble App amounted to $220 million, also down by 1% compared to the previous year, yet in line with expectations. Revenue from Badoo and other sources was $53 million, showing no growth from the previous year but exceeding estimates by 1% and consensus by 5%.
The company's EBITDA for the quarter was reported at $83 million, which translates to a margin of 30%, surpassing both the analyst's and the consensus estimates by 5%. This beat was attributed to a strategic shift in marketing expenditures, with some spending moved from the third quarter to the fourth quarter to better align with the Bumble App's product release at the end of October.
Looking ahead, Susquehanna has made some adjustments to its estimates based on the recent quarter's results and guidance provided by Bumble. The 2024 revenue estimate remains largely unchanged, but the EBITDA forecast has been increased by 1%.
However, the EPS estimate for 2024 has been significantly reduced. For 2025, the revenue estimate has been lowered by 2%, EBITDA by 4%, and EPS by a notable 8%. The revised price target of $8 reflects an approximate 2x 2025 EV/revenue valuation.
InvestingPro Insights
Bumble Inc.'s recent performance and future outlook can be further illuminated by data from InvestingPro. The company's market capitalization stands at $1.25 billion, reflecting its position in the online dating industry. Despite Susquehanna's cautious stance, InvestingPro data shows that Bumble has demonstrated strong short-term momentum, with a 34.95% price return over the last three months and an 18.5% return in the past month.
However, the company faces profitability challenges, as indicated by its negative P/E ratio of -19.56 for the last twelve months as of Q3 2024. This aligns with Susquehanna's view that the company is still in turnaround mode. On a positive note, an InvestingPro Tip suggests that net income is expected to grow this year, which could support the ongoing transformation efforts mentioned in the article.
Another InvestingPro Tip highlights that Bumble operates with a moderate level of debt, which may provide some financial flexibility as it navigates its turnaround strategy. For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for Bumble, providing a deeper understanding of the company's financial health and market position.
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