Bumble Inc
Analysts largely agree the turnaround is going to take time.
What To Know:
JPMorgan analyst Cory Carpenter downgraded Bumble from Overweight to Neutral on Thursday and lowered the price target from $17 to $7, citing a reset of management's go-forward strategy.
Bumble turned in mixed second-quarter results after the market close on Wednesday and significantly lowered its 2024 outlook as the company shifts its attention to longer-term plans to reignite user growth, deliver improved customer value and drive revenue growth.
CEO Lidiane Jones joined Bumble about seven months ago and has ambitious plans to relaunch the Bumble app. Carpenter said in a note to clients the relaunch did not have the desired impact on new user trends and monetization.
Given management's commentary on resetting its strategy, certain monetization initiatives will be put on hold and user conversion could be impacted, the JPMorgan analyst said.
"We don't disagree with this strategy, but a key lesson learned from the Tinder turnaround is that it takes time," Carpenter said.
"We continue to believe Bumble offers a differentiated, women's first experience, but we are moving from Overweight to Neutral-rated while the company works through its strategic reset."
Piper Sandler analyst Matt Farrell shared a lot of the same takeaways in a note to clients on Thursday. The analyst maintained Bumble with a Neutral rating and lowered his price target from $13 to $7.
"This strategy pivot will likely lead to multiple quarters of softer top-of-funnel trends, driving a significant revision to Bumble app revenue growth in 2024 ... While most were expecting a reset, the magnitude is very much a surprise," Farrell said.
The Piper Sandler analyst said he's not sure how long the new strategy will take to play out, and he noted that turnaround efforts could face additional headwinds if consumer spending slows. Farrell added that he's watching for signs of execution before he can get more constructive.
RBC Capital Markets analyst Brad Erickson cut his price target in half from $16 to $8, similar to the move from Piper Sandler, but he maintained an Outperform rating with shares trading around $5.30 at the time of writing.
"To say BMBL had a tough qtr would be an understatement ... Given the magnitude of the mis-execution going on here and the obvious financial impacts, the stock will be severely and rightly punished near-term," Erickson said in a new note to clients.
The RBC Capital Markets analyst noted a combination of top-of-funnel softness and self-inflicted pullbacks on monetization efforts spurred the reset strategy. Despite the near-term uncertainty, Erickson believes Thursday's sell-off is a buying opportunity given the company's strong margins and free cash flow.
The analyst believes any sort of stabilization in Bumble's paying user base over the coming quarters will drive a "meaningful bounce" in the stock.
BMBL Price Action: Bumble shares were down 32.01% at $5.48 at the time of publication Thursday, according to Benzinga Pro.
