Valentine’s Day this year is sure to bring about a flurry of mixed emotions across the country. Nearly a year into the coronavirus pandemic, people have been stuck inside their homes, using their phones to fall in (and out) of love, and everything in between. So, what better time for one of the most popular dating apps in the world to go public? Here’s what to know about Bumble’s upcoming 2021 IPO, including fundraising that has led to this point and what investors should know before taking the plunge of a newly public offering.
TL;DR
- Strong rumors are circulating around Wall Street that Bumble has filed with the Securities Exchange Commission (SEC) to have their initial public offering (IPO) sometime this coming February. The IPO date will likely be close to Valentine’s day, February 14, to tie in with the dating app’s theme.
- Bumble’s CEO, Whitney Wolfe Herd, was one of the key players in the founding of Tinder, another popular dating app.
- Within Bumble, there are three distinct modes—Bumble Date, Bumble BFF, and Bumble Bizz—each with their own features and target market.
- Match Group, the parent company of Tinder and one of Bumble’s biggest competitors, set their IPO price at $12 per share back in 2015.
- Bumble is said to be aiming for a valuation between $6 billion and $8 billion. Love is worth its weight in gold, it seems.
A quick company history of Bumble
In 2015, after departing from her role as Vice President of Marketing at Tinder, Whitney Wolfe Herd teamed up with Andrey Andreev to found Bumble.
In this endeavor, both Andreev and Wolfe Herd had one goal: to create an environment within the realm of dating apps that empowered women. Historically, dating apps like Tinder have catered to the interests of men, and Bumble’s founding duo wanted to shift the tides with a feminist approach that still managed to cater to men as well.
As such, Bumble still maintains a handful of features geared towards giving women the power in the dating app matrix. The most prominent (and perhaps most popular) feature is that once two people match, the woman is the only user who can choose to message first, and must message within 24 hours. From there, a two-way conversation can ensue.
As with many dating apps, Bumble is location-based. This means that you can only match with people within a certain geographic area, usually within 100 miles of your current location.
Similar to other successful companies like Facebook and Tinder, Bumble first gained popularity on college campuses. The app gradually began to spread outward from its headquarters in Austin, TX, eventually gaining ground with various audiences in the general public.
Fast forward a few years to 2017, and Bumble had experienced massive growth. By this time, they hit over 22 million users registered on the platform.
Competitors in the dating app industry began to take notice, and Bumble soon had an offer to be purchased for $450 million by Match Group, the parent company of Wolfe Herd’s former employer, Tinder. Wolfe Herd turned the offer down, probably to keep her vision entact.
Looking to offer their users more services within the same app, Bumble launched Bumble BFF in 2016. This mode within Bumble is designed to help users search for platonic friendships. It caused a stir, and after its success, the platform launched Bumble Bizz in 2017. Here, users can network professionally on a more casual basis than other platforms (namely LinkedIn) offer.
In July 2020, Bumble announced that it had reached the milestone of over 100 million users, solidifying its reputation as a major player in the dating app industry.
Bumble, by the numbers
Bumble has a reputation for being pretty open and upfront about how many users are active on their platform at any given time. As mentioned, they passed the milestone of 100 million users in the summer of 2020. Of course, that’s during a time when more people were on their phones due to COVID-19 lockdowns and restrictions, so the question remains of whether or not it’s sustainable.
Additionally, Bumble isn’t so forward about how many of those users are paying users, in any capacity.
Within the app, Bumble offers a few different ways for members to enhance their experience, all of which come with a price. Bumble Premium offers members the chance to go into “incognito” mode, change their location, and use advanced filters for their matches. There are other ad-hoc services available for purchase as well, such as the opportunity to “rewind” on a potential match if you accidentally swiped the wrong direction.
Bumble’s sales are rumored to have hit $300 million in 2020, an indication that future efforts may be focused towards making more money from members. Subscription-based models are extremely lucrative when done right, but “freemium” offerings have to get past the hurdle of non-paying customers and turn them into real conversions.
Bumble’s fundraising
Since its creation, Bumble has remained a privately held company, but there have been a few opportunities for potential investors to get insight as to how much Bumble might be worth.
The first instance is the aforementioned offer from Match Group. This reflected the value of a growing company, but not one who had established itself quite yet. The second, much more recent opportunity, reflects a more realistic valuation.
In the tail end of 2019, co-founder Andreev sold his stake in MagicLab (the previous parent company of Bumble) to the Blackstone Group. As a result of the sale, it was revealed that the deal had valued the company at $3 billion.
When is the Bumble IPO date?
Bumble’s IPO is expected to be brought to market sometime in early February, with rumors saying that the date is likely to be close to Valentine’s Day, February 14. I’m sure Bumble’s marketing team is buzzing with excitement at the potential for such a trendy initial public offering.
Investors will get word of an official Bumble IPO date once the company publicly files with the SEC. For now, the paperwork remains confidential.
Related: What to know about the Hims 2021 IPO
Path to the Bumble IPO
The most important step for the Bumble IPO now is the establishing of an IPO date. Once that happens,tThe Bumble IPO date will become official. Plus, all of Bumble’s fiscal history will become public knowledge, once they publicize their registration statement (or form S-1).
Expect this paperwork to be filed sometime in either late January or early February, as much as a few weeks before the date of the actual IPO.
On the date that the stock actually hits the market, investors will have one of two options. They can either place a trade with their broker ahead of time so that they purchase shares of the stock at the offering price, or they can wait any given amount of time to observe the stock’s price fluctuations.
IPO-weary investors like to take advantage of the lockup expiration date to snag shares of newly public companies. Lockup periods for new IPOs typically last about 90 days, and this means current investors can’t sell off until the expiration date.
What investors should know
A company’s IPO is a huge day, both for investors as well as the company’s internal stakeholders.
For the first time, this company will be adding on shareholders as a new party that they have an obligation to do right by. As such, the weeks and months that come after an IPO can be very volatile not only for the company itself, but for its newly listed stock too.
After the IPO, don’t expect Bumble to slow down in regards to improving their offerings. Many companies use the money raised from their IPO as a springboard of sorts, using the capital to invest in more research and development.
What’s unlikely to change will be the platform’s commitment to being a source of empowerment for women, not only in the realm of dating but also in regards to business and other fields. At a time with socially responsible and impact investing is so popular, this is super important.
Since Bumble’s paperwork isn’t yet publicized, we don’t know what the company is defining as “risk factors.” All publicly traded companies hold some sort of risk, and it will be interesting to see what Bumble defines as theirs.
Once the registration statement releases on SEC Edgar, definitely take a peek and see what risk lies behind that happy yellow logo.
Related: How to know if a stock is risky
Bottom line
Bumble has shown extensive growth since its inception, and potential investors shouldn’t expect that to slow down anytime soon. Their largest competitor, Match Group, will continue to go head-to-head with Bumble in their attempts to control the dating app market. Investors who are considering Bumble as a future investment (particularly those who are unfamiliar with the IPO landscape) should consult with their broker for advice on how, when, and how much to invest.