Delta Variant Weighs on Match, Bumble
Dating Apps’ Dilemma
Match (MTCH) and Bumble’s (BMBL) stocks have been under pressure in recent weeks as the fast-spreading Delta variant of COVID-19 threatens to hurt dating again. Both dating app companies warned about these trends when reporting second-quarter earnings. Match’s targets for the third quarter are shy of Wall Street’s forecast, while Bumble said a lot of its app users are in areas getting hit hard by the recent surge of COVID-19 infections. This has weighed on the stock prices of both companies.
Shares of Match are down about 7% year-to-date while Bumble, which went public in February and soared 63% on its debut, is 32% lower since then. However, some investors are optimistic about the long-term outlook for these companies.
Reasons for Optimism
Take both Match and Bumble’s guidance for the full year. While the companies sounded a note of caution in the current third quarter, they left their full-year guidance intact, which means they expect to end the year in strong positions. Then there are the company’s valuations. Match and Bumble are trading at about 11 times forward sales. While that is not a firesale, it is lower than their multiples earlier in 2021.
Driving a lot of the growth at Match, which posted year-over-year revenue growth of 27% in the second quarter, is Hinge, its emerging dating app. Hinge’s revenue increased 150% in the second quarter, and it is expected to have revenue of $200 million this year.
Bumble’s Secret Weapon
Bumble has a secret weapon too. In addition to its main dating app in which women have to make the first move, it has features focused on users making non-romantic connections. Women spend 24% more time on its app than men—a trend which might partially be driven by these ancillary features. Studies show that women are more willing to pay for dating apps than men, which is good news for Bumble investors. When reporting quarterly earnings, Bumble said its average revenue per paying user increased among women at double the rate of men.
Match and Bumble stocks may be taking a beating in recent weeks as the Delta variant spreads throughout the country, but their long-term prospects seem promising, and investors shouldn’t give up on love just yet.
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