Dating-networking-friend-finder app Bumble’s eagerly awaited IPO is finally upon us. $BMBL opened up 77% from its offering price, before closing out the day up 64%. With the news now official, we’re breaking down the five things you need to know about this historic IPO:
1. Bumble’s CEO is the youngest woman to guide a company through an IPO
Bumble CEO Whitney Wolfe Herd will be the youngest woman to lead a company through an IPO. The 31-years-old started Bumble after leaving dating app Tinder, where she was instrumental to its success. Bumble launched in 2014, bursting onto the market as a “dating app where women make the first move.” Since then, it has expanded its horizons from being “just another dating app” to include a networking and friend-finding component.
2. It’s temporarily unprofitable. That will probably change.
If there’s anything we’ve learned from Match Group, it’s that dating can be an extremely profitable business. According to Atom Finance, Match Group made $2 billion in revenue and had a gross profit of 74% in 2019. In other words, they made a lot of money and kept a lot of it on the books because of the margins. Bare in mind, Match owns over 20 dating apps.
By taking a look at Bumble’s S-1 prospectus filing, we can see a lot of the same ingredients for success. Bumble was profitable in 2019, making a profit of nearly $69 million. In the first nine months of 2020, the company lost $84 million. They also have long-term debts of over $550 million. Given their double-digit growth, it’s likely that Bumble is temporarily unprofitable as it scales and competes with Match Group.
3. The company had approximately 42 million monthly active users in Q3 2020
Of the 42 million monthly active users in the third quarter of 2020, 2.4 million users had paid for some component of the service between January and September 2020. Tinder is slightly more popular than Bumble, with 57 million monthly active users.
Bumble’s parent company also owns the dating app Badoo, which was founded by Andrey Andreev. Andreev has made several dating apps and encouraged Herd to build Bumble. They organized Bumble and Badoo under the holding company MagicLab. Andreev, a Russian billionaire, sold his shares to Blackstone in November 2019. Blackstone is now the majority owner of the parent company.
4. Bumble’s crossroads with Tinder and Match Group
In a time before Bumble, Herd was the vice president of marketing at a quaint dating app called Tinder. She was instrumental in its success and is often credited as one of the reasons the app became popular with college students. However, she left the company and was stripped of her co-founder title. The reason? She broke up with her then boyfriend, who happened to be Tinder’s chief marketing officer. She later sued the company for sexual harassment.
The events that unraveled at Tinder were some motivation for Herd to make Bumble. As it has grown over the last few years, it has increasingly posed a threat to Match Group’s monopoly over the dating industry. Match Group, which owns 22 dating apps, offered to acquire Bumble’s parent, MagicLab, for $1 billion. They declined the offer in 2019.
5. The company ‘upsized’ its IPO because of perceived demand
Last week, Bumble announced that it would sell 34.5 million shares in the IPO at a price between $28 and $30. This week, just days before the IPOs, they announced their plan to upsize the IPO. Upsizing the IPO means that they will now offer more shares at a higher price. It was upsized twice: early in the week before the IPO from $38-$40; and again on the night before the IPO, when it was $43 per share. The company ended up rising over 55% in its come-to-market moment, ending the day in the mid-$70s range.