KeyBanc Capital Markets analyst Justin Patterson has downgraded Bumble Inc. (BMBL) from Overweight to Sector Weight, raising concerns about the company’s future. Patterson points to weak app store data, suggesting that Bumble’s recent app refresh may have negatively impacted its key differentiator. Furthermore, Patterson believes this refresh introduces increased risks to Bumble’s financial outlook for 2025.
With Bumble shares trading at a price-to-earnings (EV/EBITDA) ratio of 5x for 2025, Patterson suggests that the company could be an attractive acquisition target. While Match Group MTCH appears to be the most likely buyer, Patterson highlights the potential for regulatory hurdles due to the significant industry consolidation that such a deal would represent.
Bumble’s new Opening Moves feature, which allows women to choose a question that encourages other users to initiate conversations, has also raised concerns. According to Patterson, this feature disrupts Bumble’s signature approach of empowering women to make the first move after a match. Although this change makes Bumble more competitive with other dating apps, it also undermines the platform’s unique selling point.
Patterson emphasizes that Bumble’s current challenges are not easily resolved. The company will need time to stabilize its business. He had previously cautioned investors about a potential earnings reset before the second-quarter results, but the actual revision was even more significant than anticipated. Revenue for the second half of the year is expected to decline year-over-year. Patterson forecasts that Bumble will report revenues of $1.067 billion for fiscal year 2024.
Bumble shares closed down 0.68% on Friday, trading at $6.43. This news comes as the online dating sector experiences mixed results. While Tinder, another dating app, has been performing well, Bumble has struggled to maintain its momentum.
