Bumble’s long-awaited IPO took place yesterday as shares skyrocketed, but should investors take a step back?
Bumble (NASDAQ: BMBL) is a great story with (hopefully) a happy ending:
Whitney Wolfe Herd joins Tinder in 2012 and is largely responsible for its growth. She leaves in 2014, suing them for sexual harassment. She then creates Tinder’s biggest rival with a dating app designed for women. This company then IPOs with a valuation of $7.7 billion, making Herd the youngest-ever female founder to take a U.S. company public at just 31.
Time for a breather…
There’s a lot of excitement behind this stock, and with good reason:
- Annual revenue has grown from $100 million in 2017 to $417 million in the first 9 months of 2020.
- Its recent confirmation as the sole owner of Badoo should add at least $200 million in annual revenue.
- Its combined businesses boast 2.4 million paying users as of 2020, and more than 40 million total monthly active users.
But there are also some concerns such as its net loss of $117 million in 2020, and the fact that it is in direct competition with the far larger Match Group, which dominates the dating business (see graph below) and is profitable.
Here at MyWallSt, we don’t add stocks to our portfolio until they have released at least 2 quarterly earnings reports. Here’s why:
- It allows hype-driven volatility to die down.
- Gives investors a chance to see for themselves how the company is performing financially.
- Allows the company to adjust to public life and the scrutiny that entails.
Investors today should bear in mind these points when considering an IPO investment instead of rushing quickly in. After all, if you believe it’s a great long-term buy, then waiting 6 months is very little in the grand scheme of things, and may even allow a cheaper entry point.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.