Wall Street’s First Date with Bumble

An IPO for the History Books

Bumble (BMBL), the dating app known for requiring women to make the first move in its heterosexual matches, went public yesterday. The company initially priced shares at $43, but the stock was up about 63% at the end of the trading day.

Bumble was founded in 2014 by its current CEO Whitney Wolfe Herd. Yesterday, Wolfe Herd, 31, became the youngest woman founder to take a US company public. 559 companies have gone public over the past year in the US, but only three, including Bumble, were founded by women.

Competition from Match Group

Bumble’s main competition comes from Match Group (MTCH), the publicly-traded dating app conglomerate which owns Tinder, Hinge, OkCupid, and other online dating platforms. As of September 2020, Bumble saw its user growth climb by 19% year-over-year. Match Group saw user growth of 12% during the same period. Match Group has a market capitalization of about $45.5 billion while Bumble’s share of the market is much smaller.

In discussing its relationship with Match Group’s apps, Bumble’s leadership emphasizes that the online dating space is not a “winner-take-all” industry, because most people use multiple dating apps at once. Bumble has advantages over some competitors because of its unique model, as well as its other non-dating offerings like Bumble Bizz and Bumble BFF.

Bumble’s Business Model

Like most of Match Group’s holdings, Bumble uses a “freemium” model. Users can join the app and swipe for free, but they can also pay for upgrades like Bumble Boost which costs $12.99 per week and Bumble Premium which costs $17.99 per week. These paid options allow users to make their profiles more prominent or view people who have liked their profiles. The bulk of Bumble’s revenue comes from these offerings, but the company also generates money from advertising and paid partnerships.

As of September 30, Bumble had 12.3 million monthly active users. With its new capital, the company plans to work on encouraging those users to buy more add-ons and premium subscriptions. Today investors showed Bumble love, and Wall Street will be eager to see how the relationship progresses.

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