Bumble Inc. (BMBL) in Austin, Tex., is the parent company of two of the world’s highest-grossing dating apps–Bumble and Badoo. With millions of users worldwide, it is one of the most popular dating apps globally.

BMBL acquired France-based Fruitz, one of the fastest-growing Gen Z dating apps in Europe, on Feb. 7, 2022. The acquisition is expected to strengthen BMBL’s presence in Europe.

Shares of BMBL have since gained 4% in price to close yesterday’s trading session at $28.80. However, the stock has declined 14.9% in price year-to-date.

Here is what could shape BMBL’s performance in the near term:

Mixed Financials

BMBL’s total revenues increased 24% year-over-year to $200.50 million in its fiscal third quarter, ended Sept. 30, 2021. This can be attributed to a 39% rise in Bumble App revenues. However, the company’s operating loss widened 58.1% from the same period last year to $8.20 million due to a 24.6% rise in total operating costs. EBT’s loss worsened 70.7% from the prior-year quarter to $10.39 million. And its net loss amounted to $10.67 million, translating to a $0.06 loss per share.

Risk Factors

BMBL stated in its fiscal third-quarter earnings report that its growth prospects are subject to various risks and uncertainties. Given the immense competition in the online dating space, BMBL’s growth depends on its ability to retain existing users or attract new users and convert users to paying users.

Also, given the increasing number of data breaches and cybercrime, BMBL might have to incur remediation costs. In addition, the company must continually upgrade its technology platform and adapt to rapid technological developments in a cost-effective manner to maintain its growth trajectory.

Mixed Earnings Growth Prospects

Analysts expect BMBL’s revenues to rise 27% in its fiscal year 2021 fourth quarter (ended December), 24.8% in its fiscal year 2022 first quarter (ending March), and 22.9% in the current year. The consensus EPS estimates indicate a 100% improvement in its about-to-be-reported quarter. In addition, the Street expects BMBL’s EPS to rise at a 79.1% CAGR over the next five years.

However, analysts expect BMBL’s EPS to fall 98.2% in the current quarter and 89.4% in its fiscal year 2022.

Stretched Valuation

In terms of forward non-GAAP P/E, BMBL is currently trading at 24.52x, which is 34.3% higher than the 18.26x industry average. Its 2.48 forward non-GAAP PEG multiple is 89.9% higher than the 1.30 industry average.

In addition, the stock’s forward 4.89 and 24.01 respective Price/Sales and EV/EBITDA ratios compare with 1.69 and 9.32 industry averages. Also, BMBL’s 54.63 trailing-12-month Price/Cash Flow multiple is 488.5% higher than the 9.28 industry average.

POWR Ratings Reflect Uncertainty

BMBL has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

BMBL has a grade of C for Growth and Quality. The company’s mixed financials in its fiscal third quarter, ended Sept. 30, 2021, justifies the Growth grade. In addition, BMBL’s 8.42% trailing-12-month ROE is 14.7% lower than the 9.87% industry average, in sync with the Quality grade.

Among 77 stocks in the Internet industry, BMBL is ranked #32.

Beyond what I have stated above, view BMBL ratings for Momentum, Value, Sentiment, and Stability here.

Bottom Line

Founded in 2014, BMBL went public on Feb. 11, 2021, through a traditional IPO. However, the stock has since slumped 61.8%, reflecting bearish investor sentiment amid pandemic headwinds. BMBL plans to expand its customer demographic to Gen Z users with its latest acquisition. However, the company is expected to face massive regulatory headwinds over privacy and data security. Furthermore, with a negative bottom line, we think investors should wait until BMBL’s profit margins improve before investing in the stock.

How Does Bumble Inc. (BMBL) Stack Up Against its Peers?

While BMBL has a C rating in our proprietary rating system, one might want to consider looking at its industry peers, Yelp Inc. (YELP), Expedia Group, Inc. (EXPE), and Alphabet Inc. (GOOGL), which have a B (Buy) rating.

BMBL shares were trading at $27.53 per share on Thursday morning, down $1.27 (-4.41%). Year-to-date, BMBL has declined -18.69%, versus a -7.20% rise in the benchmark S&P 500 index during the same period.

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.

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