Updated: Jan 18, 2022
The popular dating and networking app, headed by Whitney Wolfe Herd is set to debut on the Nasdaq stock exchange, using the ticker symbol “BMBL.”
Wolfe took over Bumble, then named MagicLab, after leaving as a founding member at Tinder. Her departure was after she filed suit against Tinder for sexual harassment and discrimination. She set out on a quest, then, to build a dating app that gave women most of the control.
The Company is set to sell shares on the open market at a time when newer, younger, investors are sure to place a higher value on the company due to the fact that Bumble's Product/market fit couldn't be better dissected and understood by any other group of investors.
Starting in late 2020, Wall Street has seen shares of tech-to-consumer outfits like DoorDash (DASH), Poshmark (POSH), Affirm (AFRM), and others, skyrocket on high demand by younger, savvier investors.
Many estimate that this trend will continue to run through 2021 and beyond as younger investors become (rightfully) emboldened by a better understanding of the equities and options markets and in the face of consistent capital gains.
Breaking down Bumble's IPO:
Taking a closer look at Bumble as a business, and looking to determine whether the firm is able to execute on future growth prospects and profitability - which leads to return on capital- The thing that sets Bumble apart from many other fast-growing tech outfits is that unlike Poshmark, or even DoorDash, Bumble actually makes money (based on their S-1 filing).
And by that, I mean, the firm keeps some of the money they take in after expenses are paid. Bumble also has a very complex ownership structure. In fact, since the app is not totally owned by the company, Bumble will, in essence, become a holding company after the IPO with the app being its prime asset.
This means the firm (Bumble Holdings) can use some of the funds raised to either buy back the rest of the app. or make other strategic acquisitions. I favor the latter. "There is no sense in owning the whole cow if half will do" And I am being told that is not a thing people say ( in my Stephen Colbert voice).
That being said, in the first nine months of 2019, The firm booked revenues of $416.6 million, carving out an impressive $68.6 million in net income. The firm seeks to raise $100 million from its IPO.
One can assume that there has been significant revenue growth based on a spike in "active users", powered by the fact that most of us have been stuck at home for the past 9 plus months.
One can safely, based on these numbers, place a $3 - $4 billion current book value on Bubble based on a conservative 8 - 10x multiple ( values the firm as a software outfit).
Any higher multiple would be based on Bumble's ability to grow users, make more money from new and older users, and improve its cost and debt structure.
See full IPO filing here.
Bumble reported user numbers as such:
42 million monthly active users (MAUs) as of Q3 2020
2.4 million total paying users through the first nine months of 2020
Bumble averages 1.5 million downloads per month
Bumble is used in 150+ countries
Revenue per paying user of $147.91 per year or ($12.32/mo)