According to Synovus Trust senior portfolio manager Dan Morgan, a Bumble IPO could value the company at more than $1.1 billion. While the estimate affirms the success of the dating app, it also represents a valuation far below the estimated $1.5 billion value stated back in January.
How this Valuation was Derived
Last month, the founder and majority owner of Bumble’s parent company Badooo, Andrey Andreev told Bloomberg he was currently in talks with J.P. Morgan to list the dating app on the NASDAQ. In the same statement, Andreev remarked that he hoped the IPO would allow Bumble to overtake Tinder parent company Match Group Inc (which operates Tinder, Match.com, PlentyOfFish, and OKCupid) as the most valuable dating app company in the world. In order to value the company, J.P. Morgan was said to use average price/sales multiples of Spark Networks, Meet Group, and Match Group Inc., then applied the multiple to 2019E revenue of $283 million. This method was used as a result of the fact Bumble has no public financial records Morgan could reference in a valuation estimate.
Bumble’s $400 Million Lawsuit Against Match
All of this comes on the heels of Bumble dropping its $400 million federal suit against Match Group Inc. last week. The suit alleged Match fraudulent obtained trade secrets from Bumble during previous acquisition talks. Reports state Bumble merely dropped the suit in order to re-file at the state level. Match, which is counter-suing Bumble in for IP theft, would prefer the suit remain at the federal level.
High Growth and Large Revenue
Bumble CEO Whitney Wolfe says Bumble’s growth is at a $200 million annual run-rate on the year. The majority of the company’s revenue is currently generated by subscriptions, however Bumble is said to be planning to allow advertising on the app later this year. According to a statement by Andreev, Bumble’s revenues on the year are as high as $400 million. While such revenue is certainly impressive such revenue would only represent roughly 1/3 of the $1.33 billion generated by Match Group Inc. over the past year.
A New Competitor Emerges
While all this sounds promising, a new potential competitor looms on the horizon for both Bumble and Match. Recent reports suggest Facebook has begun to test its own version of a dating app with users in the Columbia region. With over 1 billion users worldwide, if Facebook can capture even a modest segment of its user-base, a Facebook dating app could cut into a huge segment of the online dating app marketplace.
The Appeal of Bumble
Bumble gained popularity by being one of the first major dating apps to put women in control. When couples match by both swiping right, the conversation cannot begin until the woman initiates it first. This feature is said to cut down on unwanted messages from those men the woman is only mildly interested in , and makes for a more safe and pleasant user experience. Bumble is said to currently have more than 41 million users.