Bumble IPO: Is the Tinder Rival’s $1.1B Valuation for Real?

Bumble IPO
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Bumble IPO and Match-Bumble Lawsuit

One of the more exciting tech initial public offerings (IPOs) to close out the year will come by way of Bumble Trading Inc. The Bumble IPO is set to land sometime before 2019 and will be one of the first pure-play dating apps to enter the market.

Meanwhile, the company is engaged in a legal battle with its main rival, Match Group Inc (NASDAQ:MTCH), via a Match-Bumble lawsuit.

There’s a lot to wrap your head around when it comes to the Bumble IPO. Let’s start with Match-Bumble lawsuit.

Match owns a variety of dating services, not the least of which is the notorious “Tinder.” Bumble was started by Whitney Wolfe Herd, a co-founder of Tinder. She is now the CEO of Bumble.

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After Herd left Tinder in 2014 to start Bumble, Match sued the company, claiming that it violated both trademarks and patents while also accusing the business of abusing trade secrets. (Source: “Dating App Bumble Sets Sights on IPO as It Presses Its $400 Million Lawsuit Against Match,” CNBC, September 25, 2018.)

In response, Bumble filed a countersuit for $400.0 million. In the suit, Bumble alleges that Match Group interfered with its business by requesting that Bumble provide confidential information, using the pursuit of a purchase as a pretense.

“Match was unable to acquire us successfully, and they then filed a baseless lawsuit on our company and we are going to vigorously defend that in the court,” said Herd. “And we have the resources—the capital, the intellectual capital—to pursue this vigorously.” (Source: Ibid.)

According to a spokesperson for Match,

Our statement on this lawsuit is the same today as it was six months ago: we obviously think this has no substance. To our knowledge, Bumble still has not served us. However, we understand their desire to distract from ongoing, actual litigation, regarding their misappropriation of trade secrets and infringing on our intellectual property. Bumble is required to file a response to our original claims next week and we look forward to proving these in court.

(Source: Ibid.)

The result is that both parties are now embroiled in legal battles, the resolution of which is yet to be determined.

But the Match-Bumble lawsuit is a distraction from what otherwise is likely to be a very hot IPO.

Bumble IPO Date and Valuation

As of now, the company is set to hit the market sometime before 2019. While no firm date has been set, the company has stated that it is seeking to have the IPO sometime next month. It could, of course, be delayed, but that is the company’s plan at this time.

The valuation is one factor that may delay the Bumble IPO.

The company is said to be currently seeking a $1.5-billion IPO. Some analysts, however, have placed the company as low as $1.1 billion, with that disparity in value partly being to blame for the fluid Bumble IPO date. (Source: “IPO Could Value Tinder Rival Bumble at $1.1 Billion,Bloomberg, November 5, 2018.)

The valuation is subject to change, however, as the company is exploring new ways to monetize, namely through advertising.

Right now, the company operates on a subscription-based model, but that is set to change in the coming year.

The Bumble IPO also has a lot of potential as the company is growing with extreme rapidity; Bumble has jumped to 40 million users in four short years, up from 12.5 million in February of 2017.

The app also targets a lucrative demographic, with 72% of users under the age of 35, as well as more than 91% of users over the age of 22 holding at least a bachelor’s degree.

Considering that the average user spent 100 minutes a day on the app back in 2017, this represents a massive pool of potential consumers for advertisers to tap into, making the Bumble IPO that much more enticing considering the company’s plans to integrate adds. (Source: “8 Things You Need To Know About Bumble For Valentine’s Day,” Forbes, February 13, 2017.)

“We are at our annual run rate of $200 million for 2018, and we’re only in year three. We’ve been a profitable business since year two,” Herd said. (Source: CNBC, op cit.)

Bumble Potential: Why Bumble Could Succeed Internationally

Another very exciting aspect of the Bumble IPO is the company’s focus on expanding internationally.

With a focus mainly on English-speaking countries so far, Bumble has made successful entries into Germany and Mexico.

Since then, the company is looking to aggressively pursue other international markets, including the remainder of Europe, Asia, and Latin America.

Another huge event for Bumble is the company’s approaching entry into the Indian market, with its potentially hundreds of millions of users.

Bumble, with its female-centered approach, may also find a home in India, considering the country has faced a reckoning of late due to its gendered violence.

All this to say that the Bumble IPO will have a good ways to grow as it expands into new markets across the world, offering an alternative to Tinder with its female-focused business model.

Analyst Take

There haven’t been too many exciting tech initial public offerings in the latter half of 2018, which makes the Bumble IPO that much more interesting.

Investors are looking for a new investment to make that will see strong gains in a short period of time, therefore able to offset any downturn that may occur as a result of the currently volatile market (politically speaking).

The Bumble IPO offers exactly that. It is likely to be both be quite popular when it hits markets (depending on its valuation and when it plans to implement advertising on the app) and has the potential to see massive growth due to the company’s international expansion.

Considering how popular these mobile dating apps have grown in a few short years, coming to dominate the way young people date, I expect that these new markets will soon open up to Bumble Trading Inc in a big way, allowing for huge spikes in revenue and the potential for large gains on the stock market.