Bumble Inc (NASDAQ:BMBL) is the most recent dating site to go public. It gained a lot of buzz in 2021 from investors after its IPO, but it dipped below the IPO price after its first reported quarter. This has some investors considering Match Group Inc (NASDAQ:MTCH) as an alternative.
But which is the better investment between Bumble stock vs Match?
The Match Group has been around the block a lot longer, and it’s more than just Match.com. It includes a group of dating sites, including Plenty of Fish, Hinge, and Tinder. This gives it a wide array of dating brands, but Bumble managed to muscle in on its territory with an innovative strategy.
Bumble lets females make the first move. As such, it’s the first female-friendly dating site that creates a safe space for them to date. This is a game changer that sparked massive growth since being founded in 2014 by current CEO Whitney Wolfe.
Let’s swipe right on Bumble and Match to see which of these investments is the perfect relationship for your portfolio.
Bumble Growing Paid Users 30% YoY
Like, Match Bumble doesn’t have a single app under its umbrella. Besides its namesake app, the company also owns Badoo, which is a popular dating app in Latin America and Europe. Across both apps, the company grew paying users by 30 percent year-over-year to 2.8 million this year.
Badoo grew 19 percent to 1.45 million, while Bumble grew 44 percent to 1.35 million paid users. This subscription revenue is a key revenue source, and that’s why many investors believe that Bumble stock is a buy.
And it’s not just paid subscribers that has everyone feeling good about this stock. The Bumble platform is hoping to turn into a social media network through Bumble BFF and a business networking tool through Bumble Bizz.
This could make it a fascinating networking tool that surpasses even the buzzy social audio app Clubhouse. And that’s just the start of why investors are married to the idea of Bumble – its financials are impressive too.
Bumble App Generates 2x Per User Vs Badoo
Bumble generates about two thirds of its revenue from its namesake app, and it earns an average of $27.75 in annual revenue from each paid user on that platform. This compares to $12.76 per year per user on Badoo, and the full-year guidance for 2021 looks great.
The company’s total revenue for the first quarter was $171 million, and $113 million of that came from the Bumble app. This gave it net earnings of $323.4 million, compared to a net loss of -$55.8 million in the same quarter of the previous year.
With its IPO during the quarter, it had the money to pay down $200 million in debt and strengthen its balance sheet. The company expects to earn around $730 million in revenue for the full year, and that means it’s time to analyze its valuation.
Bumble Still Small Compared to Match
Bumble was valued at $8.00 before peaking at around $14 billion during its February 2021 IPO and it soon dipped well below the $10 billion range. The company is a steal compared to Match Group’s $40 billion valuation, but it remains to be seen if it can justify a market capitalization of over $10 billion.
To do so, the company needs to report some solid years of revenues and earnings. The signs are positive in this regard – it has strong growth, and investing now is a better value than at its IPO. It still a ways to go to catch Match.
Match Got Off The Blocks Before Bumble
Match Group was founded five years sooner than Bumble, giving it a massive head start. The company gained about 50 percent in value in the year following the coronavirus pandemic, but it has had trouble growing since.
Some believe that dating apps are a great reopening play, as people inevitably start pairing off to go out again. Dating during the pandemic was difficult, as most common first date activities (dinner and a show or even a hike in most state and national parks) were closed.
This has some investors worried about the risks of investing in Match.
Tinder Remains The Moneymaker For Match
Despite falling from its peak valuation in the first quarter, Match is still trading at nearly 80 times trailing 12-month earnings. That’s a big premium even for a company that reported $2.39 billion in annual revenue last year.
Tinder is still the biggest moneymaker for the company, but growth is slow compared to Hinge, which saw 82 percent growth toward the end of last year.
However, there’s a good chance Match share price has gotten ahead of its intrinsic value, and investors could see a rocky path ahead for the foreseeable future, especially with Bumble looking to take further market share.
Match Trading at 50x Free Cash Flow
Match made a few acquisitions earlier in the year, including South Korean company Hyperconnect, which has 500 million downloads on its flagship app Azar.
This could help the company expand internationally, even if domestic growth is slowing. However, it’s still trading at roughly 50 times free cash flow, and that could be too much of a premium for value investors, leaving Bumble as the relationship you’re likely to settle with.
Bumble Stock Vs Match: Which Is Best?
Match.com is a giant in the dating industry, and this is seen as a great reopening play. People were cooped up too long and want to go back outside to meet people and have fun. Of course, Match and its group of sites may not be the preferred platforms.
Bumble is the new kid on the block, and it’s turning a lot of investors’ heads. The company is trading for below its IPO price, and that provides a second-chance opportunity for those who want to invest in online dating without paying Match’s hefty price tag.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.