Bumble’s Stock Takes a Hit After Downgrade from Wolfe Research

Overview: Shares of Bumble Inc. BMBL dropped over 2% on Thursday, continuing to decline during pre-market trading on Friday. Wolfe Research analyst Shweta Khajuria has downgraded the stock’s rating to “peer perform” from “outperform.”

Details of the Downgrade: Analyst Khajuria pointed out several risks leading to this decision, according to MarketInsider. These included difficulties in implementing a product reset, the recent exit of the CFO, stiffening competition, and the overall slowdown in industry growth.

Khajuria, who is the managing director of global internet at Wolfe, anticipates Bumble will provide cautious guidance for 2025. She sees the company mainly as a trading option rather than a stable long-term investment for the near to medium term.

Financial Performance: Bumble’s financial performance in the third quarter fell short of expectations, despite the company exceeding revenue projections. Revenue increased by 0.7% year-over-year, totaling $273.6 million. Subscriber numbers rose from 3.8 million to 4.3 million, but the average revenue per user (ARPU) decreased from $23.42 to $21.17.

In December, Bumble announced the departure of CFO Anu Subramanian and Chief Marketing Officer Selby Drummond, who will leave the company on March 14, 2025, and in January 2025, respectively. To fill the gap, Neil Shah, a former Slack executive, has been appointed Chief Business Officer.

Stock Movement: Bumble’s stock has plummeted 45% in 2024, as reported by Benzinga Pro. Over the past month, shares have dropped 8.18%, while a more extended six-month outlook shows a decline of 17.84%.

Analyst Ratings: Approximately 27 analysts following Bumble have assigned a “Hold” rating to its stock, with a consensus price target of $16.06. BMO Capital set the highest target price at $45 on May 12, 2022, while Morgan Stanley issued the lowest at $6 on August 8, 2024. The latest ratings from Susquehanna, Stifel, and Citigroup average to a price of $7.67, suggesting a 3.69% downside for Bumble.

Looking Ahead: Investors will be watching Bumble closely as the company navigates these challenges. The stock’s performance in the coming quarters will be crucial to understanding its long-term potential.

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