Earnings Short of the Week: Bumble ($BMBL)

The past two weeks have been bearish, to say the least, between war, sanctions, energy, and commodity price shocks. Hence, this week we decided to mix up our "Earnings Play of the Week" by introducing our new series, "Earnings Short of the Week." In this series, we examine companies that we are bearish on based on the consumer narrative behind them, but don't worry, the "Earnings Play of the Week" will be back. This week we are looking at a company down 70% over the past six months, and our signals indicate that it has some more floor to go. The company? Bumble ($BMBL). Let's dive into it.  

For those who have not been in the dating scene for a while, Bumble is a dating app founded in 2014 by former Tinder executive Whitney Wolfe. Bumble is similar to other dating apps in that you swipe right or left on profiles until you get a match with someone who mutually swiped right on you. The difference with Bumble is that women are the ones to initiate the conversation with the men. Bumble offers several paid features, including Bumble Premium, Bumble Boost, and Bumble Spotlight. Additionally, Bumble owns Badoo (a dating app popular in Europe and Latin America) and recently acquired Fruitz (a dating app popular in Europe).

Bumble is scheduled to announce its Q4 earnings today after market close. The Bumble stock is currently sitting at around $16, at the time of writing, down 78% from its ATH of $76.49. Despite user growth in Q3 2021, the stock slumped after Q3 earnings and continued its decline. Similar to the stock price, NWO.ai's impact score for Bumble has declined significantly since the end of 2021. There are a few different reasons we have seen the decline. Omicron slowed dating app usage, Badoo has significant operations in Russia, and its rivals are outperforming them.

The signal for Bumble's app Badoo, a dating app based in London, has crashed over the past six months. In addition to less consumer conversation, Bumble faces a challenge with Badoo having significant exposure to Russia and Ukraine. According to JP Morgan, Badoo represents nearly 30% of Bumble revenue, and the Russia/Ukraine region may account for 3-4% of total Bumble revenue. The consequences of economic sanctions may force Bumble to pull out of the region, a similar action taken by many other companies.    

Bumble has been underperforming in its impact score compared to its main competitors, Tinder and Hinge (owned by Match Group). The absolute impact score represents the total mindshare occupied by the signal compared to the other signals being compared. So we can say that Bumble has been underperforming its competitors across the data sources NWO.ai is capturing.  

Based on the consumer conversations and NWO.ai's signal forecast, we anticipate Bumble will miss revenue expectations and reduce future guidance as it faces the economic fallout from Badoo and competition from Match Group.

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Disclosure: NWO.ai does not have a position in any equities, commodities, or cryptocurrencies mentioned. Nothing contained in this website should be construed as financial advice.