Why Bumble Stock Is Spiraling After Earnings

Bumble app on App Store on smartphone — (Image credit: Jakub Porzycki/NurPhoto via Getty Images)

Bumble (BMBL) stock is spiraling Wednesday after the online dating platform beat revenue expectations for its fourth quarter but issued guidance for its first quarter that came in well below expectations.

In the quarter ending December 31, Bumble's revenue decreased 4.4% year over year to $261.6 million. Its EBITDA (earnings before interest, taxes, depreciation and amortization) slipped 1.6% from the year-ago period to $72.5 million.

"We achieved our fourth-quarter financial objectives, while outperforming our outlook for Bumble app, by advancing our strategic objectives with discipline and focus," said Bumble Chief Financial Officer Anu Subramanian in a statement. "Over the coming year, the company plans to build upon the strong foundation it has established, with a regular cadence of product innovation and by continuing to operate with discipline and rigor."

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

The company's top-line results topped analysts' expectations. Wall Street was anticipating revenue of $260 million, according to MarketWatch.

Bumble also said total paying users increased 5.3% to 4.2 million and total average revenue per paying user was down 9.1% compared to the year-ago period to $20.58.

Sentiment turned negative toward Bumble when the company provided its outlook for its first quarter. BMBL said it expects revenue in the range of $242 million to $248 million, which came in well below analysts' expectations for revenue of $256.9 million.

Is Bumble stock a buy, sell or hold?

Today's price action is just more of the same for Bumble, which was down 40% year over year heading into Wednesday's session. Unsurprisingly, Wall Street is on the sidelines when it comes to the communication services stock.

According to S&P Global Market Intelligence, the average analyst target price for BMBL stock is $7.39, representing implied upside of over 17% to current levels. This is likely due to analysts being unable to keep up with Bumble's slide vs anticipation of a big rally. Meanwhile, the consensus recommendation is a Hold.

Financial services firm Stifel maintained its Hold rating on the small-cap stock following the earnings release and lowered its price target to $6 from $7.

"We view Bumble as one of the most innovative companies in the global online dating space, offering a compelling and differentiated value proposition for consumers, which could lead to a long runway of paying user/average revenue per paying user growth and a multi-year operating leverage story," says Stifel analyst Mark Kelley.

But Kelley admits that Bumble is "now undergoing a thorough strategy reset" and its efforts to "refresh its product mix" have "no tangible timeline."

Kelley added that competition remains intense in the online dating industry.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.