Bumble Stock Looks Aptly Priced After Recent Volatility Come-Down
The online dating industry has undergone a transformation due to the pandemic. As dating went online, it proved to be an ideal force for Bumble (NASDAQ:BMBL). It is one of the most-popular dating apps and it has seen a significant rise in the number of daily active users. BMBL stock has shown high volatility over the past month and has gone from $55 to $39 today.
The company recently reported first quarter results and despite positive results, the stock has seen a decline. It started a week before the May 13 earnings report and has now extended into this week. BMBL stock is currently priced just shy of $40 a share and I think this is just right.
If you want to add the stock to your portfolio, now is the time. With that in mind, let’s take a closer look at the investment case for BMBL stock.
BMBL Stock Shows Stellar Q1 Results
The online dating and social networking platform sets itself apart by allowing women to make the first move, thus, making it a safe space for women. However, it does not restrict itself to online dating, it also has Bumble Bizz and Bumble BFF, meant for professional networking and building friendship, respectively. This allows the company to attract users from all life stages.
Those recent Bumble Q1 results surpassed analysts’ expectations. This is only its second report after going public in February and it was impressive. The company generated $1.69 earnings per share while analysts expected a loss of 4 cents per share. Further, the revenue stood at $170.7 million as compared to the $164.6 million expected by analysts.
The revenue for Bumble App reached $112.6 million in the quarter and revenue from Badoo App increased year-over-year to $58.1 million. The paying users grew to 2.8 million, a 30% YoY improvement. Bumble added 1 million paid users this quarter. The total average revenue per paying user increased to $19.99 as compared to $17.73 in March 2020.
Second-quarter revenue is projected around $175 million to $178 million while the full-year revenue expectation ranges from $724 million to $734 million.
The company has reported stellar earnings and beat the expectations of the analysts. It shows that it has the ability to scale and grow the number of paying users. Bumble is clearly enjoying a competitive edge in the industry and is number 2 dating app in the U.S. It gives stiff competition to Match Group (NASDAQ:MTCH), the online dating giant that owns Tinder. Bumble is already challenging the supremacy of Tinder in the North American and European market.
The company has managed to attract users within a short tenure with the premium offerings like in-app video chat. As the world returns to normal and we move out of our bubbles looking for love, online apps are going to make the task much easier. Bumble has the ability to grab a larger market share in the coming years which could take BMBL stock higher.
Bottom Line on BMBL Stock
It is clear that Bumble is here to stay and will continue to make strong moves in 2021. It enjoys a competitive advantage in the industry with its women-centric approach.
As we see an increase in the number of paying users, it shows Bumble’s ability to meet the needs of its users. If the platform can manage to increase the paying user base — and I’ve no doubt about that — it will see growth in the valuation.
With the rollout of vaccines, people are stepping out and will soon be comfortable going out and meeting for in-person dates. This will boost the engagement and user base of Bumble.
The stock is aptly priced at the current level and it is ideal to buy a small position. With an increase in the user base, BMBL stock can generate high returns in the long term.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.
