Today i will be analyzing the company bumble which, if everything goes as planned, it should be going public in the nasdaq index, this upcoming wednesday, 10th 2021 under the ticker symbol. Bmbl. With this analysis, with this video, i will try to summarize a lot of information extracted from their sec filing which, by the way, it’s a bit of a mess it’s very long like all of them, but particularly this one. They will reorganize a bit the structure of the company and how it’s organized – and this also led to them – reporting their net incomes. Financial statements divided a bit between different time periods, not in like full full years, so this makes it much harder even to analyze, but anyways. We will be analyzing fully the company in order to hopefully help us determine whether this ipo presents us with a good opportunity of investment or not, but before we go into that. Let me just give you a very quick overview of the topics that we will be covering in today’s video. First of all, i will be giving an introduction to bumble some general metrics, and also we will talk a bit about the industry it is in. Then we will be looking, of course, at the financials super important, followed as well by an analysis of their projected ipo price, the valuation, and we will also compare its valuation with its main competitor, which is the match group, which in case you don’t, know the match.
Group, it is the owner of tinder and finally, of course, as always, i will be giving my personal opinion and my personal future plans with this stock. So with that said, and after i remind you that the best thing you can do, if you enjoyed this video, is to give it a like, as it will help me out massively let’s go for it. First of all, it is important to clarify that, although the company as a whole it’s called bambal, it actually owns two different dating apps, not only bumble but also another one, which is called badoo. On the one hand, as i said, we have bambal, which was founded. Not that long ago, in 2014, by its current ceo, whitney wolf hurt, which was also the co founder of actually the top dating app in the world at the moment, which is tinder. The functioning of bumble is very similar to other online dating apps, but they really stand out from the rest because they put women at the center of it. They basically aim to revolutionize a bit the world of heterosexual relationships in which it is always. You know a norm, or at least it has been up until now, that men should be the ones making always the first approach and the first step into you know starting a relationship and instead in their app, it is only women who make that first step and Approach or in this case message men so far, this concept has proven very successfully, as we will see later on and their biggest users in terms of markets are the united states, of course, canada, australia and also the uk.
Moreover, another point is that in their app, they don’t only focus on connecting people who want to date, but they also have the version of bumble for friends which basically tries to connect people who just want to make friends, maybe because they move to a different city. And want to meet other people and also the bumble for business, which basically aims to build professional connections. Then we also have the other dating app, which is badou that maybe it does not have such a differentiator like in the case of bumble, it’s more of like the same as others. But it was really a pioneer as it has existed since 2006 and its main markets are europe, and also latin america, which is also good. I think, because it diversifies a bit between bambal and badu. They cover a lot of geographic areas and, in fact, according to sensor tower, it is the fourth highest crossing dating app in the world, and we also see that bambal is currently in second place. Both of these apps have a similar business model and they both operate with a freemium model in which, basically to use the basic version of the app you can do it for free. But then, if you want to have additional services or benefits within these apps, then you need to pay in terms of the company itself as of september 30th. This past year it had in total 650 employees like full time. Employees and 560 out of these were located outside the us.
In fact, it has several offices around the world, but the largest ones are located in austin in london and also in moscow. Something to highlight is also the culture of the company, which is really built around empowering women. Actually 54 of the management team and 73 of the management board are women, which is quite surprising. It shouldn’t be like that, but it is unfortunately as when we look at other companies out there. This is mostly men in these leadership positions. Finally, just to end with introduction of the company, because i know that i’m taking a bit too long – maybe i will leave here just an image of the timeline that the company has followed with some major events and if you’re interested then again feel free to pause. The video and have a look at that talking now about the industry that they are in, which is that of online dating. It really has a lot of potential ocnc estimates that the global market for online dating will grow at an average of 13 annually, going from 5.3 billion u.s dollars in 2020 to 9.9 billion dollars in 2025 and with it within it. The freemium global market is projected to grow at an 18 annually from 3.3 billion in 2020 to approximately 7.7 billion dollars in 2025.. I personally have no doubt about these estimations and i think that just seeing how us humans are building more and more relationships online, this presents a great market opportunity for bumble and actually, according to a study published in the proceedings of the national academy of sciences, around 40 of the new couples in the united states in 2017 met online and it already surpassed other options such as meeting in a bar or restaurant or through france, for instance, and i have no data from now but i’m sure that this is even more.
After all of these, it is time now to go and look into the financials of the company and other relevant metrics, and since the sec filing is pretty chaotic and the tables are not very well displayed, let’s say i mean you can feel free to check it Out in the link below, i have chosen to present this information in excel tables. But again, if you want to verify that any of the information is true, then just feel free to go through the i don’t know how many pages of the sec filing also. I already advanced that the numbers for the full year 2020 were already reported in the sec filing as estimations because they have still have not been confirmed by the responsible authorities. But despite that, i will be using these numbers, because hopefully it can help us get a better understanding of the growth that they are having or not so, first, in terms of bumble up paying users, we see that these have been growing during the past three years. At bridge superior to 30 percent, which is great to see, as it really shows the success of the model that they use and that the people are really willing to pay for the additional premium services that they offer and then looking at badoo. We don’t see really the same as it actually has remained relatively flat during the past three years and even struggling to get new year. Users, but overall, combining both apps users are growing, but mostly led by bumble, as we have already seen.
The next tables are also very interesting, as they show the average revenue per paying user on it. Bumble is on 26.22 per paying user with a slight decline during 2020, according to the preliminary estimations at least and badou is on 12.62 dollars per paying user. Also with a decline this past year, overall, though, they make approximately 18.82 dollars for each paying user between both apps now let’s, look at the income statement to see the sales that they reported and again this was super chaotic in the sec filing. So i have displayed it in tables and overall sales have been increasing during the past three years, although the growth seems to have slowed down a bit this past year, 2020.. Also, when looking at the sales provision for the nine months ended september 30th. We see that most of the is coming from north america, with more than 50 market share over the rest of the world, and we can also appreciate that precisely north america has gained more even more market share during the past year. Finally, the last metric in the income statement is the net income, although actually they have reported more losses than income so far as you can see, which shows that, although the company is growing revenues, it still struggles to remain profitable now for the balance sheet, it is The same situation as before so i have highlighted in the excel table some relevant metrics. The first is that, as of september 30th, they had 223 million dollars in cash representing a six percent of their total assets and comparing these assets with the liabilities.
They have a very, very conservative debt ratio of 45.66 56 percent, which is great to see, and in fact this should be even lower after the ipo, because they are planning on using the money that they collect or part of the money that they collect to pay Off debt, all right so now that we have had a look at its financials let’s go into the ipo price and the valuation of this stock, and, as i already mentioned before, we will also be comparing it with the current market leader, which is the match group That owns tinder among other the online dating apps, focusing first on bumble. It is planning on putting in circulation 34.5 million shares at the price range between 28 and 30 dollars per share. Taking this information and also the fact that its estimated sales for 2020 were of 579 million dollars, i have calculated the price to sales ratio. I did not do the price to earnings ratio because it reported losses basically and doing this. We have that it’s priced roughly. Accordingly, between 1.67 and 1.79 times, sales, which is a very low number personally, especially when we compare it with the match group that, based again on the sales that they reported this past year, 2020 and also its current stock price. At the moment of preparing this video, it has a price to sales ratio of 14.93 times, which is really really high in order to see whether this is really justified, this price to sales ratio.
I have now prepared a brief comparison between both companies. In it, we see that the match group is making revenues four times higher than those of bumble with this lower growth rate, also than bambal, which is also understandable as they are more consolidated and then looking at the income statements, we see that the match group is Consistently profitable, although the profits also decrease substantially during 2020.. Based on this information, i do understand that the match group is a safer play in an industry that is growing overall. But despite this, i don’t see justified the massive difference that there is in the price of sales ratio between both companies. Nevertheless, now it’s time for me to give my opinion on the company – and i must say that, although i’m, not a current user of online dating apps, i do see a lot the potential of it and especially as well with the shift that is happening in society. With doing more even more and more things online also, i must add that, although at the beginning before starting to analyze the company, i did not think that i would be interested in investing in it. I must say that its ipo price really seems very attractive and down to earth. Of course, we need to see, then at which price it really starts trading on ipo day, but so far the 28 to 30 dollars of price range. I think that it’s very fair. However, although i find bumble very interesting and i will very likely be investing in it, i would like to share my two biggest concerns with you, which actually we have already discussed it.
The first one is that they are still not able to remain profitable and that we have already seen – and secondly, is that they are growing yes, but not at the rates that i would like to be seeing from a company that is not as well established as Its main competitor, which is the match group, so i think that this is also they are metrics that we should monitor during these upcoming years anyways. I do really like the concept of the bumble app and if it really finds ways to monetize a bit more its app, i think that it can offer some very nice growth opportunities in the future. Also, considering that the singles population in the world is increasing, more people are going mobile. You know on digital platforms and also with the pandemic. It has put us a bit more of with distance it’s harder to meet people when going to a bar to a restaurant. To the gym, because, basically you cannot go so i really see a lot of future potential for it. Despite it, though, remember that this video is done for the entertainment purposes and that i am, of course, no financial advisor of any kind, and i take absolutely no responsibility if you end up losing money on this stock and if my calculations were wrong. In any case, that was it for today.