On Thursday, Bumble Inc. (NASDAQ:BMBL) stock faced another downgrade from Buy to Neutral by a BTIG analyst, who also slashed the company's revenue and earnings estimates. The revision comes with a warning that Bumble's app payers and revenue are expected to decline in the second half of the year.
The analyst's assessment points to upcoming challenges for the company, noting that similar issues have affected Match Group (NASDAQ:MTCH), indicating that Bumble could experience an extended period before any potential recovery.
Bumble's guidance suggests flat to a 2% decline in revenue for the third quarter and a 4-6% decrease for the fourth quarter. Additionally, the company anticipates a quarter-over-quarter decrease in the number of paying users in the fourth quarter.
An attempt to revitalize the platform in April has not yielded the expected results, and the introduction of new Premium Plus features has been postponed. Furthermore, new safety measures are likely to negatively impact user counts, effectively resetting Bumble's progress in driving user engagement.
The analyst expressed concerns over the time it might take for Bumble to regain its footing, citing the lack of clarity on what would be required to do so. The report draws parallels with Tinder, which has seen a decline in paying users for seven consecutive quarters, suggesting that Bumble is only at the beginning of a similar trajectory. In light of these challenges, the analyst has reduced the 2025 revenue forecast for Bumble by nearly 20% and the EBITDA projection by 28%.
The downgrade and the significant cut to Bumble's financial estimates underscore the difficulties the dating app company may face in the near future. The market will be watching closely as Bumble navigates these headwinds and attempts to reposition itself for growth amidst a competitive and rapidly changing online dating scene.
InvestingPro Insights
Amid the concerns highlighted by the BTIG analyst, Bumble Inc. (NASDAQ:BMBL) presents a mixed bag of financial metrics and market performance. According to InvestingPro data, Bumble's market capitalization stands at approximately $1.02 billion, with a high P/E ratio of 48.41 indicating that investors have high earnings expectations relative to the company's current earnings. Despite recent challenges, Bumble's revenue growth over the last twelve months as of Q1 2024 remained robust at nearly 15%, showcasing the company's ability to expand its top line.
InvestingPro Tips suggest that management's aggressive share buybacks and a high shareholder yield may reflect confidence in the company's value proposition. Additionally, the expectation of net income growth this year provides a glimmer of hope for profitability amidst the downward revisions by analysts for the upcoming period. While the stock has faced significant declines, with a 55.2% drop in the one-year price total return as of Q1 2024, the company's liquidity position is strong, with liquid assets exceeding short-term obligations, which could offer some resilience in challenging times.
For investors seeking more comprehensive analysis, there are over 18 additional InvestingPro Tips available, which could provide deeper insights into Bumble's financial health and market position. These tips, along with real-time metrics, are accessible through the InvestingPro platform and could be invaluable for making informed investment decisions in the volatile online dating sector.
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