Bumble to start trading just before Valentine's Day after raising IPO target to US$2.1bn

Bumble Inc. is expected to start trading on the Nasdaq on Thursday after once again expanding its IPO target to raise US$2.1bn.

Started by 31-year-old Whitney Wolfe Herd, who co-founded competitor Tinder in 2012, it requires women to make the first move to get the conversation started.

READ: Deliveroo, Bumble at centre of IPOs speculation amid growing investor confidence

Bumble also has a BFF spin-off, designed for people looking for new friends based on shared interests, while the wider group also comprises Badoo, a ‘standard’ dating app where either party can message first, focused on Europe and Latin America.

According to the prospectus, it’s still in the early stages of global expansion but generated 47% of total sales from outside North America last year, with paying users rising 18% to 2.4mln as of September.

Total monthly active users were 42.1mln at the end of the third quarter last year.

On Wednesday it sold 50mln shares at US$43 a pop, a target that was raised twice from the initial plan to place 34mln shares at US$28-30 each.

The market capitalisation was valued at US$8.2bn based on the outstanding Class A shares listed in filings, Bloomberg reported, from a US$3bn valuation estimated in 2019 after private equity Blackstone snapped up a majority stake.

Wolfe Herd has highlighted how Bumble’s women focus is a “powerful shift” in the dating apps space.

“Archaic gender dynamics and old-fashioned traditions still ruled the dating world,” she said in a letter to investors.

“This led to all sorts of unhealthy dynamics that ultimately disempowered women and created unnecessary pressure for men.”

Bumble is competing with Nasdaq-listed Match Group Inc, owner of Tinder, Match.com, Meetic, OkCupid, Hinge, PlentyOfFish, Ship and OurTime.

In the quarter to December, the dating app giant had an average of 10.9mln subscribers, delivering a 19% increase in revenue to US$651mln with underlying earnings (EBITDA) jumping 13% to US$0.2mln.

Another big competitor is Facebook (NASDAQ:FB), which has been rolling out its dating service over the past year or so.

It was meant to launch in the UK and Europe exactly a year ago on Valentine’s Day, but the debut was delayed by eight months after the European data regulator blocked it.

Although it’s connected to the social media giant, it requires users to create a separate account to find potential love matches.

Ashley Madison, a 20-year-old website for married people looking to cheat on their partners, remains strong as it counted 60mln users in 2019 after 30mln people got their names leaked in a data breach six years ago.

The UK stock market is perhaps lagging behind in the sector, with no companies for love seekers listed in London at the moment.

AIM-listed Cupid plc changed name to Castle Street Investments plc in 2015 after selling all its dating businesses, namely Cupid, UniformDating and LoveBeginsAt after trading was hampered by the growing popularity of Tinder.

“Planning a launch around St Valentine’s Day is no accident and Bumble will be counting on pent up demand for romance being unfurled once pandemic restrictions ease,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“There will be no love lost with Tinder, with competition expected to continue to be fierce. Facebook is another suitor for a big share of the valuable dating market and can shoot a cupid’s arrow at its 2.7bn users to win business.’’

Story by ProactiveInvestors