Is Bumble Doomed?
TLDR; Nobody really likes dating apps anymore, but Bumble has been exceptionally bad and it could be all over for them.
After a few minutes of scrolling through the ‘2025 ins and outs’ trend on TikTok and X, it started to feel like everyone was going to be leaving dating apps in 2024. Dating app popularity grew almost out of necessity, during the pandemic it was physically impossible to meet people in real life, and post-pandemic, Gen Z completely forgot how to interact with people in real life. I started to wonder if this tide was turning and if market data supported the trends I saw on my feeds.
There are a host of publicly traded dating apps, but the most notable are; Match Group (MTCH 0.00%↑), who own 9 separate apps including Tinder and Hinge, Grindr (GRND 0.00%↑), and Bumble (BMBL 0.00%↑). Very quickly I was able to tell that the scale and diversity of Match Group’s app portfolio would allow them to stay relevant and resilient in the space. Grindr is by far the most popular LGBTQ+ focused dating app and has nailed its niche, creating an environment that fosters usage pre, post, and during relationships. Bumble was also founded with a niche in mind as the first dating app that promised to “put women first, always”. However, a combination of shaky leadership, unfavorable dating trends, and an uncompelling attempt to reposition themselves made me uncertain of their ability to grow, so let’s take a look at some of these factors.
Company Overview
Whitney Wolfe Herd is the co-founder of Tinder, but after a workplace harassment scuffle in 2014 she left the company and drew up Bumble, a dating app designed to empower women by giving them the ability to make the first move in conversations. Herd saw immediate success and following an acquisition of Bumble’s parent company in 2019, Bumble went public in 2021, raising $2.2bn and making Herd the youngest female CEO to take a company public1. Since then, its stock price is down 90% and there are very few signs pointing to a recovery.
Following the company’s poor performance, Herd stepped down as CEO this time last year and was replaced by Lidiane Jones, who has been a longtime tech exec and the former CEO of Slack. Although this sounds good on paper, Jones seems to be interested in taking Bumble in a different direction to their founding principles as “customer preferences and needs have evolved” and “that means our category needs to change”. We’ll get into the headwinds in their industry that prompted this later, but for a platform that has placed such an emphasis on its niche to try change will be extremely difficult.
In addition to this, the President of the company departed the month prior to Herd stepping down, and their CFO and CMO will both be departing in Q1 this year. All of these executives have been at the company since before their IPO and suggests to me that the company is going in a direction that doesn’t align with what they joined to work on. This all comes at a time when they are reducing their headcount by 30%, which could be a cost structure reorganization, or an attempt to mask employee attrition; but I would have had to interview previous employees to make any substantial claim here.
Major strategy changes
The biggest changes for the company came last spring when they announced that women will no longer have to make the first move on the app and that they are expanding their focus to building friendships and a community rather than relationships. I’m sure the MBA holders they employ know way more than me, but if I downloaded an app for a purpose that doesn’t exist anymore, I wouldn’t keep using it unless the app was really good (stats on this later). Additionally, I really can’t see Gen Z, who is 50% of their audience, wanting to keep making friends online in the long run (stats on this in the next section), and paying for it at that. Nevertheless, they put their money where their mouth is and acquired a community-building app called Geneva Technologies, so they either know something I don’t, or they’re clutching at straws trying to stay alive.
Industry Headwinds
Where People Are Meeting
According to Stanford research, 75% fewer couples are meeting online post-covid. This has been replaced by 180% more couples meeting at a Bar or Restaurant, 105% more at work, and 50% more at college (does anyone have any data on run clubs?). This change has also been reflected by slowdowns and declines in the number of active users on dating apps across all major platforms.
The Nara Smith Effect
Since scrolling on TikTok seems to be a productive source of idea generation for me, I find growing interest in the ‘Tradwife’ particularly interesting in Bumble’s context. If this reflects a genuine subversion to progressive gender norms in dating, Bumble will suffer almost exclusively in the dating app market because of it. I can’t use this as a justification for Bumble removing the first move feature, but Damona Hoffman, an online dating coach and author, said “Women started to feel burdened by having to think of what to say, having to always keep the conversation going” and this is what likely drove bumble to remove the feature.
Business Cycle Subversion
I was surprised when reading their 10-k as they mentioned “our highest performing months for user growth and user engagement are during the first and third quarters of the fiscal year”. First off, I can’t see this pattern in their stock price over the last three years, and if dating apps truly are an ‘out’ for Gen Z going into a new year, they will lose their Q1 growth if it truly exists (might not be represented by stock price movement).
You can also check out Match Group and Grindr’s pattern in the supporting figures section at the end, although their price pattern doesn’t show the clear seasonal growth mentioned in Bumble’s annual report, they are certainly closer to it.
What’s Wrong With Their Business?
Pricing
The first thing that stood out to me about their flagship app is that it is expensive, which is fine if you are delivering a higher quality product, but when I compared their app store reviews to the average price of a monthly subscription on the app they were the worst out of their competitors at $8 per app store star; followed by Grindr at $7.80, Hinge at $6.90, and Tinder at $4.30. This isn’t a perfect metric since paid user distribution isn’t equal across all subscription types, but even using their average revenue per paying user (ARPU) as a substitute, they still come in more expensive per star at $5.62 compared with Grindr at $5.57 (no single app ARPU data from Match Group).
The only explanation for this was that people were paying a premium for a product catered to them, which makes sense since Bumble and Grindr are the most expensive by that metric. However, if Bumble is moving away from their niche, they can no longer justify the app’s higher pricing, and they certainly don’t have room to lower pricing (financial health analysis coming shortly).
Community Building
Bumble also managed to massively offend the one group of people they really had to keep happy last year by running an ad campaign poking fun at celibacy, which instead of bringing the “joy and humor” they expected, had women uniting to boycott the app, making Hinge the only dating app where women are the majority of its audience2.
On top of this, I looked at the ratio of comments to followers (000s) on Instagram for these dating apps trying to see if Bumble has a unique edge in the community-building space that led them to think it would be a good pivot for the company, however, I found quite the opposite. Grindr leads the pack at 1:7, followed by Tinder at 1:8, and Bumble comes in at 1:45 (Hinge has no Instagram presence). I also noticed that a decent number of those comments were coming from the admin of Bumble’s Instagram account, usually replying to complaints about the app, so I ran the numbers without those comments and the ratio came out to 1:50.
To top this off, I remember during my freshman year (2 years ago) they would come to campus and give out branded hats and stickers to students. I haven’t seen a Bumble hat or sticker in a long time and I would’ve expected a company focusing on community building to be doubling down on actions like this to engage their target market. Or maybe I’m just salty I never got one :(
Debt and Stock Buybacks
Bumble has $616mm in debt due in 3 to 5 years, in comparison they only have $29.7k due in the 3 years up to that. Although they have a higher quick ratio than Grindr (2.09 vs 1.46) they come in lower than Match Group who have a ratio of 2.49. Considering Match Group has a convincing plan to keep making money, Grindr is still very much a high-growth company, and this ratio does not take into account long-term liabilities, this could become a real issue for Bumble sooner rather than later.
I think this ratio will see even more compression as they’ve committed to a share repurchase program, which was initially supposed to be $150mm worth of shares when it started in May 2023, but has seen incremental increases to $450mm now. For a company that does not have a convincing plan to increase cash flow combined with long-term liabilities, I don’t believe using cash to buyback shares will help their real growth story; especially when the capital they are investing is generating a return less than their competitors (see next section). It makes me wonder if the repurchase program is more about padding EPS and their stock price rather than a show of confidence in the future of the business. They are also currently dealing with a class action lawsuit for fraud after they allegedly made false and misleading statements to their investors, which doesn’t help.
My View on Their Valuation
The majority of analysts have maintained a hold on the stock or downgraded Bumble from buy to hold, and I think this is because the stock is already extremely cheap from an EV/EBITDA, EV/Revenue, and P/S point of view. It is difficult to make a case for further downside based on these metrics, but looking at some more nuanced metrics paints a slightly different picture.
They have a Debt/EBITDA ratio similar to Match Group, but their financial future looks a lot more bleak, which makes me think this ratio will keep expanding. Their EV/ARPU shows that they are significantly worse at effectively monetizing their users, and although this multiple might grow if they benefit from the operational efficiencies of their headcount reduction, I can’t see long-term growth in this multiple because I think it will be difficult to scale their user base. A ‘glass half full’ approach here would suggest this ratio might come closer to Grindr’s, but I’m unsure if we can keep comparing them to a niche product, and it would take a miracle for them to compete with Match Group. Finally, their ROIC is not as embarrassing as some of their other metrics compared to MTCH 0.00%↑ and GRND 0.00%↑, but I’d like to see their capital allocation being more effective than their peers rather than in line to build the case that we might see a mean reversion in the price for BMBL 0.00%↑.
Conclusion
Clearly a lot has gone wrong for Bumble over the last year, and it will be even more interesting to watch their performance over the next. In my opinion, the best thing that could happen for Bumble is a take private to work on their pivot and growth, which would obviously be good for the stock price, but I question who would see them as a suitable acquisition target since not many people are still super bullish on the dating app space, especially in a higher for longer environment. Nonetheless, they were a great company with a noble mission and it would be sad to see them go. Or not, let’s all get outside and date the OG way!
As always your thoughts your thoughts and opinions and valued and more than welcome. Thank you for reading and Happy New Year!
Supporting Figures
Disclaimer: This is not financial or investment advice, do your own due diligence. All information utilized is publicly available.
https://ir.bumble.com/news/news-details/2021/Bumble-Inc.-Prices-2.2-Billion-IPO/default.aspx
https://www.ft.com/content/6f28bf28-8378-436f-ac7f-8fd1e2de17e2