Will Bumble’s share price see some love in 2022?

Bumble’s [BMBL] share price hasn’t had much love since the online dating app IPO’d in February. Since listing, the stock has fallen over 50% (through 30 November) with many investors choosing to dump it in the hopes of finding a longer-term match elsewhere.

So-so earnings haven’t helped the cause, but with people meeting up in person following the easing of pandemic restrictions - at least for now - more people are dating in person. A good thing for Bumble and its share price, although the company has been talking up opportunities for virtual hookups in the metaverse.

Is this a cheap stock which is set to turn its fortune around and offer investors a significant long-term return? How wary should investors be of a continued slide in the current share price?

Should investors be out of love with Bumble’s share price?

Bumble’s share price slide intensified between 8 and 12 November, dropping 30% after a reported net loss of $10.7m in the third quarter. Analysts polled by Refinitiv had expected Bumble to break even. It also remains an unprofitable company with higher cost of revenue and marketing expenses causing a decline in adjusted EBITDA margin.

Despite the post-earnings slide, Evercore ISI upgraded their rating for the Bumble stock from In-Line to Outperform saying that ‘one quarter doesn’t represent a trend’ and that there was upside to both Wall Street’s full-year 2022 estimates and likely fourth quarter subscriber numbers.

Helping the dating app’s prospects is the fact that people can once again meet up and go on actual dates, rather than the virtual kind.

"Bumble is a reopening play and the company should also benefit from key growth catalysts — international expansion, tiered pricing, and product development, in addition to benefiting from option value in potential app store fee changes," the analysts say.

Evercore has pinned a $50 price target on Bumble, up from $47. The analysts are even more keen on rival Match, which is in a strong position thanks to its market position and geographic reach.

Bumble expects fourth quarter revenue to come in between $208m to $211m, ahead of analyst forecasts of $205.9m. For the full year, revenue is guided for between $765m and $768m, on an adjusted EBITDA of $205m and $207m.

Evercore’s bullish move has them joining a herd of generally bullish analysts – the consensus target is $57.93, representing a relatively high degree of confidence for a stock that closed Tuesday just north of $34.

Online dating in the metaverse

In a roundup of tech leaders’ takes on the metaverse, CNBC’s Alex Sherman quoted Bumble President Tariq Shaukat as saying the concept is something the online dating app is looking at, though Shaukat did sound a bit wooly outlining his plans.

“On the metaverse piece, we’re really taking a Web3 lens on this in particular, meaning we are... I’m sure somebody will build a more virtual experience and we will happily engage and be there when they do that with avatars, etc,” says Shaukat. “We want to make sure we’re setting the technical and engineering foundation for whatever emerges in the metaverse and in the Web3 world.”

“We want to make sure we’re setting the technical and engineering foundation for whatever emerges in the metaverse and in the Web3 world” - Bumble President Tariq Shaukat

According to Wired, 'Web3’ is a ‘decentralised online ecosystem’ based on blockchain technology. Shaukat goes on to name-check ‘blockchain’ and ‘crypto’ as areas that are ‘really interesting in the near-term’.

Whether we are seeing a CEO outlining a genuine position remains to be seen. The first line of Sherman’s piece reads ‘The concept of the metaverse is still vague’. He’s not wrong and at best it could be described as an immersive internet that uses virtual and augmented reality. So while the concept of the metaverse is wooly the idea of using an online dating app isn’t too much of a stretch.