Although Bumble (currently trading at $5.28 per share) has gained 22.8% over the last six months, it has trailed the S&P 500’s 29.3% return during that period. This may have investors wondering how to approach the situation.
Is now the time to buy Bumble, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free for active Edge members.
Why Is Bumble Not Exciting?
We're cautious about Bumble. Here are three reasons you should be careful with BMBL and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Bumble’s 7.2% annualized revenue growth over the last three years was tepid. This fell short of our benchmark for the consumer internet sector.
2. Customer Spending Decreases, Engagement Falling?
Average revenue per buyer (ARPB) is a critical metric to track because it measures how much the average buyer spends. ARPB is also a key indicator of how valuable its buyers are (and can be over time).
Bumble’s ARPB fell over the last two years, averaging 4.6% annual declines. This isn’t great, but the increase in paying users is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Bumble tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether buyers can continue growing at the current pace. 
3. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Bumble’s revenue to drop by 9.7%, a decrease from This projection is underwhelming and implies its products and services will face some demand challenges.
Final Judgment
Bumble isn’t a terrible business, but it doesn’t pass our bar. With its shares underperforming the market lately, the stock trades at 1.9× forward EV/EBITDA (or $5.28 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are more exciting stocks to buy at the moment. We’d suggest looking at one of our top software and edge computing picks.
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