MW Bumble turnaround 'still in early innings,' as analysts cut estimates

By Therese Poletti

'Product-driven turnarounds take time,' said J.P Morgan

Shares of Bumble Inc. stumbled after the opening bell Wednesday, falling nearly 20%, after its earnings guidance disappointed Wall Street analysts, with several cutting their estimates for the online-dating app company.

On Tuesday, Bumble's (BMBL) fourth quarter results were slightly better than analysts had forecast, but they showed that the company is still in the midst of a product-driven makeover. Revenue fell 4.4% to $261.6 million amid tougher competition for its dating apps and online-dating fatigue among its core audience, Gen Z consumers. Guidance though, was worse than expected.

"The Bumble turnaround remains in the early innings," JP Morgan analysts said in a note to clients. "Product driven turnarounds take time, with Bumble still focused on improving engagement before shifting focus to conversion and revenue." JP Morgan lowered all its quarterly estimates for 2025 and reduced its December 2025 price target to $7 from $8, maintaining a neutral rating.

Bumble's guidance for first-quarter revenue of $242 million to $248 million implied lower user growth sequentially of about 100,000 to 120,000 paying users, said Stifel Research analyst Mark Kelley, who added that he expects declines in paying users to continue in the near term.

Stifel cut estimates for 2025 and 2026 and its price target went to $6 from $7, and maintains a hold rating. Kelley said that while the company now has focused on creating a healthier ecosystem, prioritizing safety and authenticity for its users, similar to rival Match Group Inc. $(MTCH)$, "these shared priorities will increasingly make it difficult for dating apps to differentiate their offerings going forward," Kelley said.

Analysts were pleased that the return of founder and Chief Executive Whitney Wolfe Herd was permanent and not temporary, but the company faces headwinds in the online-dating arena in its turnaround.

Match Group, the developer of Tinder, is also in the midst of a turnaround, seeking to innovate its app, revive its growth rate and stave off activist investors. It recently appointed a new CEO.

"The broader malaise impacting the online dating industry has certainly not spared Bumble," Raymond James analyst Andrew Marok said in a note adding that his financial model for Bumble is under review.

Bumble shares have fallen about 40% over the past year, while the S&P 500 SPX has climbed 22%.

-Therese Poletti

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February 19, 2025 09:33 ET (14:33 GMT)

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