Bumble Inc: A New Pandemic-Recovery Tech stock

BMBL stockThis Tech Stock Could Be Special

Technology stocks had a great run last year due to their pandemic-proofness.

Because technology allowed us to work, go to school, and play from home during the lockdowns, many tech stocks shot up while traditional sectors struggled. Just look at how much the tech-laden Nasdaq Composite outperformed the S&P 500 last year and you’ll see what I mean.

Now though, with the COVID-19 vaccine rollout and strong economic recovery, investors’ appetites seem to have changed a bit. Sure, the pandemic isn’t over yet, but we’re already seeing increasing investor interest in recovery plays. Meanwhile, tech stocks that previously shot through the roof have experienced pullbacks lately. Some of them are already in correction territory.

The thing is, not all tech stocks are the same. While some tech companies benefited from the pandemic environment, certain tech companies are positioned to do well when the economy goes back to normal.

Advertisement

Check out Bumble Inc (NASDAQ:BMBL), for instance. Bumble stock went public on February 11 with an initial public offering (IPO) price of $43.00 per share.

Founded in 2014, it’s the parent company of “Badoo” and “Bumble,” two popular dating apps with millions of users worldwide.

Just based on that description, it’s easy to see why Bumble could be quite different from other tech companies during a pandemic. When people were staying at home, they tended to use social media apps more often to stay connected with family and friends, but the number of people who were willing to go on dates with strangers found through dating apps was probably less than before.

And that’s why, compared to the pandemic-proof tech stocks, BMBL stock is more of a recovery play.

The best part is, even though we haven’t defeated the pandemic yet, Bumble Inc has already been churning out very impressive growth rates.

According to its latest earnings report, the company generated $165.6 million of total revenue in the fourth quarter of 2020, which represented a 31.1% increase year-over-year. (Source: “Bumble Inc. Announces Fourth Quarter and Full Year 2020 Results,” Bumble Inc, March 10, 2021.)

In particular, revenue from the Bumble app grew 46.6% to $105.8 million, while revenue from the Badoo app and other sources rose 10.5% to $59.8 million.

The number of paying users—a critical metric for dating apps—totaled 2.7 million for the company in the fourth quarter of 2020, up 32.5% from the two million the company had in the year-ago period.

Bumble Inc generated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $44.1 million in the fourth quarter of 2020, which more than doubled the $21.0 million of adjusted EBITDA the company earned a year earlier.

Looking ahead, management expects Bumble to generate $716.0 to $726.0 million of revenue and $173.0 to $178.0 million of adjusted EBITDA in full-year 2021.

Bumble Inc (NASDAQ:BMBL) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

While Bumble Inc has already established a solid position in the dating app business, Bumble stock is very new. But as is the case with many new tech stocks, it’s hard to find BMBL stock at the IPO price.

As you can see from the above chart, Bumble stock closed at $70.31 on its first day of trading, marking a gain of more than 63.5% from its IPO price. After that, the stock retraced some of its gains, but it has started trending upward again in recent trading sessions. The company’s earnings report on March 10 certainly helped with that.

Bottom line: Bumble Inc is a pandemic recovery play. If the company can continue churning out impressive growth rates, more returns could be on the horizon for BMBL stock investors.