However, over a longer timeframe, Bumble hasn’t exactly been a match made in heaven for Wall Street. Since going public in 2021, the share price is down by a whopping 91%, shredding the market cap from around $15bn to just $715m.

Founder-led business again

Bumble was founded in 2014 by Whitney Wolfe Herd. To stand out in a sea of competition, she flipped the script. Instead of men messaging women, which was the norm on dating apps like Tinder (which Herd also co-founded), only women could initiate the conversation with heterosexual matches.

This female-friendly format was wildly popular for a few years, but growth started to peter out in 2024. Herd stepped down, and her replacement effectively dropped the rule that women must message first. This damaged — or at least weakened — Bumble’s unique selling proposition.

The founder returned in March. Since then, Herd says she has been “returning [Bumble] to what makes us trusted, unique, and deeply human“.

Start-up mentality

The news that sent the stock up yesterday was that the company will lay off nearly a third of its global workforce. This will save $40m per year after $13m-$18m in charges are incurred. It will reinvest this on product and technology development.

In an email to staff, the CEO said this restructuring will help restore a “start-up mentality…rooted in an ownership mindset and team structures designed for faster, more meaningful execution“.

For the second quarter, Bumble expects revenue to be $244m-$249m, up from previous guidance of $235m-$243m. Analysts forecast full-year revenue of $956m, which would be a year-on-year decline of around 10.8%.

Looking to next year, there isn’t much revenue growth pencilled in, though that might be intentional. Bumble has signalled that it wants to deliver “a more intentional experience with more quality and relevant matches“.

In other words, it sounds like the firm is focused on improving the user experience rather than marketing for revenue or user growth.

Perhaps unsurprisingly then, the valuation appears very cheap. The stock is trading at 0.6 times sales and 9 times forward earnings.

If Bumble manages to steady the ship and then reignite growth, the stock could be set for a big comeback. It’s still down 33% over the past 12 months, even after rebounding 80% since its April low.

Why I’m bearish

Leaving aside the lack of growth, there’s another fundamental reason why I won’t touch the stock. This is that dating apps just aren’t that scalable, in my eyes.

Unlike social media platforms that benefit from endless user engagement, dating apps are designed to be deleted. Once users find a match — the whole point of the product, in theory — they often leave. That makes churn high and long-term retention tricky. 

What’s more, many users are saying that they’re fed up with the ghosting and lack of connection on dating apps. Not to mention the bad dating experiences! We see evidence of this with Tinder owner Match Group, which is also struggling for growth. 

I prefer to invest in companies that have powerful growth engines. Unfortunately, Bumble doesn’t, and that’s a risk. Therefore, I’m going to pass and look for a better match for my portfolio. 

The post Up 25% in a single day, but I won’t touch this Nasdaq stock with a barge pole! appeared first on The Motley Fool UK.

Bumble

What it does: Bumble is an online dating platform that sets itself apart from competitors as women make the first move.

By Muhammad Cheema. It’s easy to be pessimistic about Bumble (NASDAQ:BMBL) shares. They’ve declined by 92% since going public in 2021 and have fallen by 60% in the last year alone. This is mainly because of the slower-than-expected growth. Recently trimming its growth forecast from 8-11% to 1-2% didn’t help.

Don’t get me wrong, there are risks of it fading out if growth doesn’t pick up. But I’m betting it will, so I’ve recently added to my position.

I truly believe that online dating is the future of dating. It’s not my preference, to be honest, but it’s the way the world is trending. Many people are glued to their phones, and meeting people online is becoming more common.

Let’s not forget the company is still growing and is profitable. In fact, in its recent quarterly results, net earnings increased by 306% year-on-year.

Finally, Bumble shares seem oversold to me. They’re now trading at a forward price-to-earnings (P/E) ratio of 8.9. This represents a potential bargain.

Muhammad Cheema owns shares in Bumble.

Hilton Food Group

What it does: FTSE 250 member Hilton Food is a leading “multi-protein” producer with a core focus on meat production.

By Roland Head. Shares in Hilton Food (LSE: HFG) look good value to me after a recent share price correction.

The company’s recent half-year results revealed a mixed picture. Although adjusted pre-tax profit rose by 25% to £33m, sales only rose by 1% on a comparable basis.

What interested me was the improvement in Hilton’s profitability in the UK. Margins in the group’s home market were boosted by its growing seafood business and sales of premium meat products.

Looking further ahead, the firm is set to expand into North America with the opening of a new facility in 2026/27. This is backed by a contract with Walmart Canada.

Hilton has disappointed before and the group’s profits could be hit by consumer downtrading or the loss of a major contract.

However, broker forecasts have been upgraded recently and I think the shares look reasonably valued at current levels. I’ve recently added Hilton Foods to my portfolio.

Roland Head owns shares in Hilton Food.

iShares Edge MSCI USA Quality Factor UCITS ETF

What it does: iShares Edge MSCI USA Quality Factor UCITS ETF invests in US companies that enjoy strong and stable earnings.

By Royston Wild. With an average annual return of 14.72% since it started eight years ago, the iShares Edge MSCI USA Quality Factor UCITS ETF (LSE:IUQA) has been near the top of my shopping list for some time. In recent days I pulled the trigger and finally added it to my portfolio.

As its name implies, the fund provides me with exposure to the strongly performing US stock market. Major holdings here include tech giants Apple and Nvidia, soft drinks maker Coca-Cola, and payment card services providers Visa and Mastercard.

This selection illustrates the ETF’s focus on companies with solid profits records. More specifically, it targets companies that have “[a] high percentage of company earnings allocated to shareholders; low levels of debt; and low variability of year on year company earnings.”

On the downside, a high concentration of cyclical stocks may leave the fund vulnerable during economic downturns.

Information technology, financial services and consumer discretionary companies alone make up more than 52% of the fund. However, a proven ability to deliver a strong return over time still makes it an attractive investment in my book.

One final thing: with an ongoing charge of just 0.2% per annum, it’s also extremely cost effective.

Royston Wild owns iShares Edge MSCI USA Quality Factor UCITS ETF.

Norfolk Southern

What it does: Norfolk Southern is one of the US Class 1 railroads. It operates on the Eastern side of the country.

By Stephen Wright. Warren Buffett used to own shares in US railroad Norfolk Southern (NYSE:NSC). And since I think there are reasons why this company can do well, I’ve been buying it for my own portfolio. 

Since 2014, the US transportation market has shifted from roughly even between truck and rail to now being 64% trucking. That’s despite trains being cheaper and less carbon-intensive.

The reason is that railroads almost across the board have focused on margins and provided a poor service. But Norfolk Southern is looking to change that, and I expect this to continue even after Alan Shaw’s departure. 

The company has been working on improving its reliability and efficiency in ways that benefit its customers. And I think this means it has a good chance of regaining market share over time. 

The risk is that this approach is going to result in lower margins, which could offset revenue growth. But I think its strategy is the right one and that’s why I’ve been buying the stock.

Stephen Wright owns shares in Norfolk Southern.

Rolls-Royce

What it does: Civil aerospace giant Rolls-Royce manufactures aircraft engines, marine propulsion systems, and power-generation system. It also makes engines for military aircraft, ships and submarines.

By Harvey Jones. When a stock goes gangbusters like Rolls-Royce (LSE:RR.), I get whipped up into a frenzy of fear and greed, just like everybody else.

I was lucky in one respect. I spotted the FTSE 100 group’s recovery potential in October 2022, and bought right at the start of its index-smashing run. Unfortunately, I only invested a small sum, and was left with the sticky decision of whether to buy more as the Rolls-Royce share price flew ever higher.

I held back, knowing sod’s law would strike and the stock would fall as soon as I piled in. I finally gave into FOMO on 1 August, after Rolls-Royce beat first-half guidance and announced the return of its dividend. 

I paid 495p and the stock fell the moment I clicked the ‘buy’ button, exactly as I feared. I averaged down on 6 August at 455p. So far I’m down 3.16% on those trades. Which is a bit rubbish given that Rolls-Royce shares are up 503% off over two years and 113% over one. Timing the market never works. I should stop.

The rapid recovery phase is over but I still expect a steady stream of growth and income over the years. If Rolls-Royce shares dip in the short run, I’ll buy more.

Harvey Jones owns shares in Rolls-Royce.

Taylor Wimpey

What it does: Taylor Wimpey is one of the UK’s largest home builders. In 2023, it completed 10,848 homes. 

By Charlie Keough. I’ve had FTSE 100 housebuilder Taylor Wimpey (LSE: TW.) on my watchlist for some time now. I recently decided to snap up some shares. 

There are a few reasons for this. Firstly, the stock has been soaring. It has climbed 8.6% in 2024 and a whopping 41.6% in the last 12 months. I’m confident it can keep this form up. 

That’s because the current housing shortage should benefit the firm. To fix the issues we’re currently facing, the Labour government has promised to build 1.5m new homes over the next five years. 

That’s not to say I don’t see potential risks with Taylor Wimpey. The housing market has struggled over the past couple of years and any further setbacks would impact its share price. For example, a delay in further interest rate cuts would have negative implications for the business. 

Yet despite potential issues in the months ahead, I couldn’t resist its meaty 5.9% dividend yield. That’s considerably above the Footsie average of 3.9%. 

Charlie Keough owns shares in Taylor Wimpey. 

TripAdvisor

What it does: TripAdvisor runs a digital platform offering a range of travel-related services such as hotel reviews and experiential travel bookings.

By Christopher Ruane. In August, I wrote that I was eyeing buying more TripAdvisor (NASDAQ: TRIP) shares for my portfolio in September. That is exactly what I ended up doing.

The share has lately been trading close to its one year low. As well as a potential bid that never materialised, investors have been concerned about whether a weak economy could dampen travel spending, hurting revenues and profits at TripAdvisor.

But does the company, with strong cashflows, really merit a market capitalisation of under $2bn?

Its brand is unique and ubiquitous, the experience booking offering has seen strong growth and, for now at least, travel demand remains robust.

Yes, it operates in a cyclical business. But I think the business has a strong competitive position for the long term that means it looks cheap at the current price.

So, even though my existing holding showed a loss on paper, I used the price weakness to buy more shares.

Christopher Ruane owns shares in TripAdvisor.

Uber Technologies 

What it does: Uber Technologies is a leading global rideshare and food delivery company.

By Ben McPoland.I recently became a shareholder in Uber Technologies (NYSE: UBER). The previously loss-making firm has reached a point where its massive scale and cost-cutting efforts are translating into profitable growth.

In the first six months of the year, it generated $968m in operating profit. This was a 15-fold increase over last year. Earnings per share growth is expected to exceed 100% over the next couple of years then rise by double-digits after that.

This year, the company partnered with Instacart in the US, enabling the latter’s customers to order from hundreds of thousands of Uber Eats’ restaurant partners.

Looking ahead, the rise of autonomous vehicles (AVs) might pose challenges. Uber has partnered with over 10 AV players, including Waymo and Cruise (subsidiaries of Alphabet and General Motors, respectively). But there remains a long-term risk that these firms use their own consumer apps to poach some of Uber’s customers.

As things stand though, the company appears to have solid growth potential in countries like Spain, Germany, Japan, India and South Korea. It notes that in these places, ‘Uber’ isn’t yet used as a verb.

Ben McPoland owns shares in Uber Technologies.

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But could this fallen angel be poised for a phoenix-like resurrection? Let’s peel back the layers of this beleaguered dating app’s story and see if there’s still a spark of romance for potential investors.

Losing charm

The firm burst onto the scene with a revolutionary premise, namely put women in the driver’s seat of online dating. This fresh approach, coupled with savvy marketing that would make Don Draper proud, sent the shares soaring to nearly $80 post-IPO. Fast forward to today, and Bumble’s nose-dived to below $7. For early investors, it’s been less of a honeymoon and more of a bitter divorce.

So what went wrong? A perfect storm of slowing user growth, cutthroat competition, and a broader economic climate that’s fallen out of love with cash-burning tech unicorns. The latest quarterly results tell a tale of two companies: revenue growth chugging along at 8.1%, but profitability taking a nosedive faster than a bad first date.

Reasons for optimism

Yet, for the eternal optimists out there, the story isn’t all heartbreak and missed connections. The company has finally stumbled into profitability territory. The brand still packs a punch, especially with the ever-desirable younger crowd. With new CEO Lidiane Jones at the helm, fresh from success at Salesforce, there’s hope that Bumble might just find its second wind.

Competition in the form of Tinder looms large, while upstarts like Hinge are stealing hearts left, right and centre. The post-pandemic world has seen healthy dating app usage. But there’s the ever-present challenge of turning free users into paying customers. With 17.6% more users paying for the app’s premium features compared to this time last year, the company’s strategy seems to be working.

Can it recover?

Reigniting user growth, boosting those all-important monetisation metrics, and expanding into new markets are all on the to-do list. And let’s not forget about keeping costs in check.

At its current rock-bottom price, the firm might look tempting for investors with a taste for risk and a long-term outlook. A discounted cash flow (DCF) calculation suggests there could be about 70% growth in the shares before it hits fair value. But make no mistake – this isn’t a firm for the faint of heart or the easily spooked. The world of online dating moves quickly, and Bumble will need to stay on its toes to avoid being left swiping through an empty user base.

For those brave souls willing to consider taking a chance, this growth stock could be the ultimate comeback story. But remember, in the unpredictable world of investing, even the most promising matches can end in disappointment.

For now though, I don’t think there are enough reasons for me to invest. I’ll be swiping left on this one.

The post Down 91% in 5 years, can this growth stock ever recover? appeared first on The Motley Fool UK.

A rundown of the company

Bumble acts to match users based on sharing profile details and photos, which a user can swipe left (to reject) or right (to accept). The business was founded in 2014 and went public in 2021. Ironically, it was started by Whitney Wolfe Herd who previously worked at another dating app company.

The firm makes money through different avenues. This includes a premium paid-for platform, cash from advertisers and in-app purchases.

It has grown to 3.8m paid users as of Q3, marking a jump from the 3.3m in the same quarter last year, highlighting the growth of the business.

Disappointing results

Even though the business is growing, results so far this year haven’t kept pace with analyst expectations. This was true of the Q3 results, where the revenue figure missed the forecast. This now means it’s unlikely to reach the full-year outlook plan.

News broke last week that Wolfe Herd would also be stepping down as CEO. I’ve no doubt that this story will continue to evolve in coming weeks, but whatever the reasons for the move, it’s not great for the stock.

Large market potential

There’s no doubt that dating apps will continue to grow in size and scale in coming years. There’s strong demand for the product. As Bumble is already doing, there’s huge scope to expand the offer with supplementary services. The CEO commented in the latest results that they are “making progress on the sizeable opportunity beyond dating”.

In my eyes, this means the potential value of Bumble is considerably larger than is currently being considered.

Not overvalued

Another reason to like the stock is because of the fall this year. Tech stocks usually trade at lofty valuations based on high levels of expected future growth. Yet with the performance of Bumble shares this year, the stock trades with almost zero premium.

For example, the enterprise value of Bumble is $2.15bn, while the market-cap is close at $1.95bn. This shows the share price isn’t factoring in any optimism for future growth and is just trading at the fundamental value of the company.

I believe Bumble has a bright future based on the potential market size and the level of growth it currently has. Once the departure of the CEO is behind us and the business has moved on, I think many will flock back to buying the stock. On that premise, I do think the stock is worth investors considering right now.

The post Down 44% in a year, is this US growth stock screaming to be bought? appeared first on The Motley Fool UK.

So why did Bumble’s share price plummet yesterday? And has the fall created a buying opportunity for me?

Why Bumble’s share price just tanked

The huge share price fall here was the result of the company’s third-quarter 2021 earnings report, which was a little disappointing overall.

Bu there were plenty of positives too. For example, total revenue for the period was up 24% year-on-year to $201m with Bumble app revenue up 39%. Meanwhile, total average revenue per paying user (ARPPU) increased to $22.97, compared to $19.38 a year earlier. Additionally, the group raised its guidance for the full 2021 year. It now expects total revenue of $765m-$768m for the year.

However, the market didn’t like the fact that Badoo app and other revenue fell 3% to $58m. Last quarter (Q2), revenue here was up 11%. It also didn’t like the fact that total paying users came in at 2.87m, down from 2.93m at the end of June.

As a result of these latter issues, a number of brokers cut their share price targets for the stock. One such broker was RBC, which cut its target price to $55 from $65.

Should I buy Bumble stock now?

When I covered Bumble earlier in the year after the IPO, one concern I had was the stock’s valuation. At the time, the market-cap was around $13bn and the price-to-sales ratio was around 18. Both seemed a little high to me.

After the recent share price fall, the valuation is now far more reasonable. Today, the market-cap is $7.4bn and the forward-looking price-to-sales ratio is about 9.7 using the midpoint of 2021 revenue guidance. Those figures aren’t that high, in my view, given the company’s growth.

One issue for me however is that the company is not consistently profitable yet. In the first quarter of 2021, the group posted net earnings of $323m. However, in Q2 and Q3, it posted net losses of $11.1m and $10.7m respectively. This adds risk to the investment case. I’d like to see the group deliver consistent profits. It’s worth noting that rival Match Group has been posting big profits for years.

Another concern is competition. In this industry there are very low ‘switching costs’, meaning that users can easily jump between apps. There are also low barriers to entry, meaning that start-ups can easily launch new products and capture market share. The jury is still out as to whether Bumble has a genuine competitive advantage, in my opinion.

Given these issues, I’m going to keep Bumble shares on my watchlist for now. There are certainly things to like about the company. However, I think there are better growth stocks to buy right now.

The post Bumble’s share price just fell below $40. Should I buy the stock now? appeared first on The Motley Fool UK.

This beginning is relevant because it underpins what makes Bumble different, and why the Bumble share price is undervalued.

Dating with a twist

Bumble changed the rules of dating. After a match, only women can send the first message. This has a two-fold effect. First, women cannot receive unwanted messages or pictures, increasing the app’s safety. Second, it provides a unique space where women can reverse societal gender roles, and men can avoid the normal dating uncertainty. It also has a rapidly growing ‘Best Friend Forever,’ section, where men and women can seek platonic friendships.

The effect of the pandemic is clear. In the UK alone, online dating app usage surged, as “people spent £3.8m, a rise of 5% from the previous quarter.” The app reached over 100m subscribers last year. After its IPO in February, the share price quickly surged to $78 before falling to a more realistic $49 today. 

A numbers game

Bumble has a market cap of $9bn, only one fifth of the value of Match at $45bn. This alone shows me that there’s plenty of room for growth for the Bumble share price. It boasted 21.4% of the UK market share as of 30 April.

In its first-quarter earnings, Bumble generated profit of $323.4m, compared to a loss of $88.4m in the same quarter last year. On top of this, paid users also increased 30% to 2.8m. It reported revenue growth of 43% year over year of $170.7m, above the consensus forecast of $164.6m. 

Bumble’s revenue rose 36% to $488.9m in 2019, then rose again 19% to $582.2m in 2020. It expects 2021 revenue of between $724m and $734m, an increase of between 24% and 26% compared to 2020.

In short, the numbers are pointing in the right direction for the Bumble share price.

The bull case

The app has growth potential in India where it already has 4m users. Bumble is partnering with Bollywood actress Radhika Madan to increase its exposure, and recently released a survey showing that over two-thirds of Indians say it is possible to fall in love online. This is an impressive statistic from a traditional country.

The share price at the IPO had a price-to-sales (P/S) ratio of 18. At its current price of $49, the P/S ratio is about eight. Short interest in the company is negligible, meaning that larger investors don’t think the company is likely to fail.

However, there are some red flags. Bumble has stiff competition in the European and American markets. As the owner of Tinder, Match is a far larger competitor by valuation. There are dozens of other dating apps that could take the wind out of Bumble’s sails. In addition, the stock has only fallen since its IPO. However, at the current price Bumble share price and potential for scalability, it could make a valuable addition to my portfolio.

The post Here’s why I think the Bumble share price is undervalued appeared first on The Motley Fool UK.

Has this share price weakness created a buying opportunity for me? Let’s take a look at the investment case for this online dating app operator.

Bumble: Q1 results

Bumble’s first-quarter 2021 results, posted on 5 May, showed the company is still growing at a healthy rate. For the quarter, revenue came in at $170.7m, up 43% year-on-year and above the consensus forecast of $164.6m.

Meanwhile, total paying users increased 30% year-on-year to 2.8m. Total average revenue per paying user (ARPPU) was $19.99, compared to $17.73 in Q1 2020. Encouragingly, Bumble generated net earnings of $323.4m, compared to a net loss of $88.4 in Q1 2020.

On the back of these results, the company raised its full-year guidance. It now expects full-year revenue of between $724m and $734m.

It seems the market wasn’t impressed with these results, as Bumble’s share price fell sharply on the day after they were released. The main reason for the share price fall was that some investors thought the company’s guidance was quite cautious.

Bumble stock: the bull case

Looking beyond the company’s growth, there are a number of things I like about Bumble stock. One is that the company is led by founder Whitney Wolfe Herd, who launched the Bumble app in 2014. Quite often, founder-led companies turn out to be good long-term investments.

Another thing that stands out to me is that there’s been some bullish insider buying recently. Regulatory filings show that on 26 May, Bumble board member Amy Griffin spent approximately $5m on stock. Griffin is the managing partner of G9 Ventures, an early-stage fund that supports small companies. Clearly, she thinks the share price is going higher.

Bumble’s valuation also looks more appealing now. When I covered the stock in February, it was sporting a forward-looking price-to-sales ratio of around 18. Today, it’s price-to-sales ratio is about eight. That seems far more reasonable.

Finally, Bumble’s short interest is relatively low at present. This is reassuring. It tells us that hedge funds aren’t making massive bets against the company.

Risks

I do have some concerns about Bumble stock however. One is in relation to the competition it faces. Currently, there are a number of other dating apps including Tinder, Match, and Hinge. In this industry, barriers to entry are quite low and users can be quite fickle.

Another concern is that, recently, a number of brokers have lowered their price targets for the stock. On 13 May, there were downgrades from JP Morgan ($60 to $55), Jefferies ($82 to $65) and Evercore ISI ($64 to $53). This isn’t what I want to see in a prospective investment.

Bumble stock: my move now

There are definitely things to like about Bumble stock, in my view. However, weighing everything up, I don’t see it as a strong buy right now. All things considered, I think there are better growth stocks I could buy at the moment.

The post Should I buy Bumble stock today? appeared first on The Motley Fool UK.

Should I invest in Bumble stock?

Bumble is a social networking platform that consists of a dating app, business networking arm (Bumble Bizz) and space to make friendships (Bumble BFF). The company also owns dating app Badoo and UK gay dating app Chappy through a recent acquisition.

There are a few things I look for in a company before buying shares as a long-term investment. Leadership is one of those, along with a competitive edge and room for growth.

I’m impressed by the leadership publicly presented by Bumble CEO Whitney Wolfe Herd and her team. I think it’s always good to see strong leadership and a sense of true ownership of a company. And it seems to me that the 31-year-old founder clearly represents this attitude.

I also think it’s important to understand a business model if I’m going to invest in it. While I understand what Bumble is, I don’t know that it’s got enough of a distinctive difference from its competition. It’s got the dating app, which is unique in that “women make the first move”. This is designed to encourage a safe and respectful dating experience devoid of abuse and intimidation. It’s certainly a welcome change from some of the seedier offerings available. However, is it enough to maintain its edge?

Highly competitive space

The dating space is evergreen because there are always people looking for love. Therefore, it can hold up well in a recession. However, it’s quite saturated and I get the impression users are easily bored, jumping from one app to another with ease. I don’t think it would take much for a new contender to arrive on the scene and steal its thunder. Especially considering how far Bumble has come in just seven years.

Match Group is Bumble’s chief competitor, but I find it concerning that the two companies have been involved in legal tangles in the past. Hopefully that’s behind them now, but management in these high-profile firms seems to comprise a fairly small pool of people. Burning bridges between them so early on, may not bode well for the future.

Those added extras, being able to network and socialise in a platonic way, mean Bumble might keep users for a lot longer than competitors that only offer the dating option. However, those features are arguably in competition with Microsoft-owned LinkedIn and Facebook.

I like the story behind the business and can see room for growth. But its early days, and for now, I’m not tempted to invest in Bumble shares. I’ll keep it on my watch list and see how it goes.

The post The Bumble share price jumped on IPO. Should I invest in this popular US stock? appeared first on The Motley Fool UK.