Evercore ISI downgrades Bumble stock amid lowered revenue guidance By Investing.com

On Thursday, Evercore ISI adjusted its rating on Bumble Inc. (NASDAQ:BMBL) stock, moving from Outperform to In Line and slashing the price target to $8.00 from the previous $18.00.

The decision follows Bumble’s second-quarter earnings, which fell short of analyst expectations, primarily due to a miss in average revenue per paying user (ARPPU).

Management has also significantly revised its guidance for the second half of the year, projecting a year-over-year revenue growth of only 1-2%, a stark drop from the previously forecasted 8-11%.

The dating platform’s recent quarterly report revealed that the company is undergoing a strategic reset aimed at improving the demographic balance and intent of users within its ecosystem, as well as enhancing the overall experience for both free and paid customers.

However, this shift is expected to disrupt near-term monetization, as indicated by the management’s forecast that total revenue growth could turn negative for both the third and fourth quarters of the year. Additionally, the number of Bumble payers is anticipated to decrease by the fourth quarter.

Management has cautioned that the implementation of these strategic changes will take multiple quarters before the company sees a recovery at the top of the funnel. The immediate market reaction to the revised guidance and earnings report was a steep 30% decline in Bumble’s stock price during after-market trading.

The downgrade and new price target reflect the anticipated challenges Bumble faces as it attempts to recalibrate its business strategy in the face of disappointing financial performance and a cautious outlook for the upcoming quarters. The company’s efforts to reposition itself and its services will be closely monitored by investors as Bumble navigates through this transitional period.

In other recent news, Bumble Inc. has seen significant changes in its financial outlook and strategic direction. The company has considerably reduced its annual revenue growth forecast from 8%-11% to a mere 1%-2%, following a failure to meet second-quarter revenue expectations.

This adjustment has led to a deceleration of certain monetization initiatives, including the expansion of its Premium Plus subscription service.

Analysts from J.P. Morgan and Stifel have downgraded Bumble’s stock due to these developments, marking a shift in investor sentiment. J.P. Morgan has moved its rating from “overweight” to “neutral,” while Stifel has changed its rating from “buy” to “hold.”

Despite these downgrades, Wolfe Research maintains an “outperform” rating on Bumble, citing the company’s strategic focus on refreshing the Bumble app and expanding internationally. The company’s second-quarter revenues fell short of expectations, totaling $268.6 million, but it surpassed earnings expectations with a profit per share of 22 cents.

These are recent developments for Bumble, as it continues to navigate strategic changes and financial performance. The company also completed the acquisition of Geneva Technologies, a social networking specialist, aligning with Bumble’s strategy to expand its services beyond dating.

InvestingPro Insights

In light of Evercore ISI’s recent rating adjustment for Bumble Inc. (NASDAQ:BMBL), it’s worth considering additional insights provided by InvestingPro. Despite the near-term challenges highlighted by the company’s management, Bumble is trading at a low P/E ratio relative to near-term earnings growth, which suggests that the stock may be undervalued given its earnings potential. This is further supported by the fact that Bumble’s net income is expected to grow this year, indicating potential for recovery and profitability.

Moreover, the InvestingPro data shows a notable gross profit margin of 70.5% for the last twelve months as of Q1 2024, demonstrating Bumble’s strong ability to retain earnings after the cost of goods sold. However, the stock has experienced significant volatility, with a price decline of over 55% from the previous year and trading near its 52-week low, which may present a buying opportunity for long-term investors who believe in the company’s strategic reset.

For those considering an investment in Bumble, there are 19 additional InvestingPro Tips available, which provide a comprehensive analysis of the company’s financial health and market performance. These tips can be accessed through the InvestingPro platform by visiting https://www.investing.com/pro/BMBL.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.