Whatâs Going On Here?Bumble listed its shares on the stock market on Thursday, and investors used their best opening lines to slide into its good books: the dating appâs shares initially rose 76% (tweet this). What Does This Mean?Bumbleâs shares listed at a higher-than-targeted $43 each, raising the company $2.2 billion in the process and valuing it at $8.2 billion. That led to a windfall for private equity firm Blackstone, which bought a majority stake in Bumbleâs parent company at a $3 billion valuation back in 2019.
Bumble (and subsidiary Badoo) is free to use, so it makes most of its money by selling dreams â or rather, premium features that aim to increase usersâ chances of finding a perfect match. And itâs working: Bumble has 2.4 million paying daters who spent a combined $417 million in the first nine months of 2020. Why Should I Care?Zooming in: Investors are ghosting Tinder.
Itâs been up and down for Bumble over the past couple of years: the company made a $66 million annual profit in 2019, but suffered a $117 million loss in the first nine months of 2020. Still, investors were keen to buy in, which couldâve been because the companyâs price-to-sales ratio â that is, its market capitalization to annual revenue â of 14 times was lower than Tinder-owner Match Groupâs 20. In other words, Bumbleâs shares mightâve been a bargainâŠ
For markets: IPOs are hot right now.
Bumbleâs not the first company to join the stock market this year, but its warm reception might set the tone for other high-profile listings to come. Newly infamous Robinhood, for instance, might be hoping for its own Bumble-esque liftoff, while cryptocurrency exchange Coinbase has opted for a direct listing. In other words, itâll let investors set its share price directly, making its share price far less likely to shoot up when it debuts. | 