Love at Second Sight: Bumble Stock is buzzing again
Sometimes making a pairing work is a matter of second chance, and apparently Wall Street is willing to give. buzz (NASDAQ: BMBL) another shot. JP Morgan Analyst Cory Carpenter on Tuesday raised the shares of the world’s second-largest online dating apps player, dropping its rating from neutral to overweight. Its price target of $ 55 translated into a 65% increase from Monday’s close.
Carpenter is not the only contender here. This is the third week in a row that Bumble stock has been improved by a Wall Street pro. Bumble initially took off after going public at $ 43 earlier this year, but it’s an initial public offering (IPO) that has been halted in the past four weeks. He’s lost more than half of his max value, but it’s hard to keep a fast-growing disruptor who also turns out to be a clear reopening game for a long time.
Get it right the second time around
Carpenter recently met with Bumble management, leaving encouraged by his near-term outlook. The stock fell below its February IPO price in early November after posting disappointing quarterly results. The 24% year-over-year revenue growth was ahead of its previous forecast, but Bumble reported a problematic sequential decline in paid app users. The bottom line was also affected due to an increase in marketing spending.
Carpenter believes the investor bailout may have overstated the pessimism by focusing solely on slowing the growth of paid apps. The application itself is showing strong growth momentum. Carpenter also believes net subscriber additions for Bumble in 2022 will exceed this year’s performance.
Bumble’s namesake site stands out in a crowded area of dating apps in that only women can initiate a potential connection. It is the second most popular dating app in the world in terms of income generation. Bumble also operates Badoo, the world’s fourth highest grossing app.
Last week it was Andrew Marok at Raymond James upgrading stocks with an outperformance rating and a price target of $ 48. With the stock falling 30% since its poorly received third quarter, Marok felt the time was right to get back into the action. Building on Bumble’s strong guidance for the current quarter, Marok argued that the outlook suggests a strong performance in average revenue per user.
The week before it was Evercore ISI Analyst Shweta Khajuria kicked off the series of upgrades. She came in with an outperformance rating and a price target of $ 50. Khajuria believed at the time that weak Q3 net additions were not the start of Bumble’s loss of market share. She has seen market estimates for net additions rise in the fourth quarter as well as the year ahead.
Growth has slowed at Bumble, but that doesn’t mean the fundamentals are starting to deteriorate. Two events in the past few months – the company’s subsidiaries that helped Bumble go public unloaded a ton of stock in September and the disappointing third quarter report in November – weighed on the stock, but none of these actions are fatal. The September sale of shares may have increased the float, but it did not change the number of shares outstanding. Last month’s report was disappointing, but even there Bumble managed to show off its monetization prowess by posting a 19% year-over-year increase in average revenue per user.
Bumble is still a solid growth stock with a clear trail to take off as we come out of this pandemic and return to courtship rites. Getting in on the stock for less than the February IPO price makes Bumble appealing, and like the app itself, it’s up to potential investors to make the initial connection to get to know the stock better.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.