Bumble has been treading water for the past six months, recording a small return of 1.7% while holding steady at $8.20. The stock also fell short of the S&P 500’s 16.8% gain during that period.
Is there a buying opportunity in Bumble, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
We're swiping left on Bumble for now. Here are three reasons why there are better opportunities than BMBL and a stock we'd rather own.
Why Is Bumble Not Exciting?
Founded by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ:BMBL) is a leading dating app built with women at the center.
1. Customer Spending Decreases, Engagement Falling?
Average revenue per buyer (ARPB) is a critical metric to track for consumer subscription businesses like Bumble because it measures how much the average buyer spends. ARPB is also a key indicator of how valuable its buyers are (and can be over time).
Bumble’s ARPB fell over the last two years, averaging 2.6% annual declines. This isn’t great, but the increase in paying users is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Bumble tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether buyers can continue growing at the current pace. 
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Bumble’s revenue to drop by 3.9%, a decrease from its 14.6% annualized growth for the past three years. This projection is underwhelming and implies its products and services will face some demand challenges.
3. EPS Barely Growing
Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Bumble’s EPS grew at a weak 3.6% compounded annual growth rate over the last three years, lower than its 14.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Bumble isn’t a terrible business, but it doesn’t pass our bar. With its shares lagging the market recently, the stock trades at 3.7× forward EV-to-EBITDA (or $8.20 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. We’d suggest looking at a top digital advertising platform riding the creator economy.
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