Bumble plumbs new low as revenue forecast cut, new strategy trigger turnaround concerns

:Bumble shares slumped nearly 36 per cent to a fresh record low after the women-centric dating app slashed its annual sales growth forecast and paused some revenue-generation efforts, turning the spotlight on the pace of a turnaround.
Last trading at $5.11, the $1 billion company was set to lose more than $350 million in market value. The fortunes of Bumble have turned since its $14 billion blockbuster Nasdaq debut in 2021 dating app operators grapple with a post-pandemic decline in growth.
The company now expects its full-year revenue to grow between 1 per cent and 2 per cent, compared with an earlier forecast of 8 per cent to 11 per cent. It also missed expectations for second-quarter revenue.
Bumble will slow down certain monetization efforts, such as the expansion of its Premium Plus subscription offering originally planned for the second half of the year.
The forecast reset raised concerns about uptake following the recent relaunch of Bumble’s eponymous app and a refresh of the Premium Plus offering as it faces sluggish user spending.
Bumble “has gone back to the literal drawing board on product development to drive better virality, user experience and ultimately monetization,” RBC analysts Brad Erickson and Logan Reich wrote in a note.
While the app relaunch improved engagement and the women’s experience, it did not have the desired impact on attracting new users and monetization, analysts at J.P. Morgan said, downgrading Bumble to “neutral” from “overweight”.
Turnaround efforts usually take time, they said.
The Austin, Texas-based company’s total average revenue per paying user decreased to $21.37 in the second quarter from $23.23 a year earlier.
“We aren’t sure how long this new strategy will take to play out, which could face even more headwinds if consumer spending slows,” said Piper Sandler analyst Matt Farrell, nearly halving Bumble’s price target to $7.
At least eight brokerages trimmed their price target on the stock after results. The average rating of 23 brokerages covering the stock is “buy” and their median price target of $12.50 implies a 55 per cent upside in the next 12 months.
Bumble’s price-to-earnings ratio, a key metric in valuing stocks, was 7.91 times, much lower than rival Match Group’s 15.15 multiple.