Some of my own thoughts on if the ipo makes sense, including giving you an idea of bumble’s valuation as compared to the competition. And then, if you like what you see, maybe you’ll stick around and join the community. We’D love to have you on board and speaking of the community it’s great, to see you guys again, and i have to give a shout out this week to chris who’s been with us for a while. Last week he commented on the glassware behind me and it’s cracked me up just to clarify to everyone out there, particularly to law enforcement officials. Those are not bongs. Now, if that’s your thing, not hating, just dating all right, let’s get to the bumble ipo. As many of you might recall, i put out a video in december on what i felt were the seven top 2021 ipos that i expected to come out early in the year and bumble with its dating apps was one of them. I had mentioned at the time that the company was likely to come out around valentine’s day and that’s exactly what’s happening. It would have been great to have a bumble ipo right on valentine’s day, but with february 14th falling on a sunday. It just wasn’t meant to be now it’s looking to go public before the 14th and i’ll give you the date. I expected to start trading in a few now at the time of that ipo preview video. There was nothing official, as bumble had yet to release a public ipo filing or s1 form.
We have that now so before we get to my personal thoughts on the company, let’s start off talking about some of the more important information from the filing and we’ll begin with a little background of the company. Just to get you up to speed, as you think about, if investing in bumble stop makes sense, bumble was co, founded by whitney wolf, heard and badoo app founder, andrea andrew who, in 2020, decided to leave the company and sold a steak to blackstone. Amid some controversy, the company has since rebranded the bumble and badoo apps under an umbrella brand named bumble inc. Now, as i mentioned, the preview video wolf heard, who is also the company’s ceo previously co founded match’s popular tinder app. However, in 2014 she left tinder and filed a sexual harassment lawsuit which was settled later that year. I mentioned this for two reasons: one that she has experienced a multiple successful dating apps and two. The experience at tinder may have led her to the idea of developing an app that was intended to be more comfortable for women soon after the settlement with tinder. She met up with andrew and founded bumble. A company with an app that’s purpose was to lead to less pressure and more empowerment of women by only letting women users initiate conversations in heterosexual matches. The app, while known primarily as a dating app, has evolved where it can be used for platonic friendships with bumble. Bff in business networking with bumblebiz two areas that the company looks to further develop and monetize.
So if you’re not familiar with the bumble, app location based matches are made by using the swipe method. That became popular with tinder, which not surprisingly, led to even more lawsuits between the companies that have since come to resolutions anyways in the app you swipe right if you’re, interested and left, if you’re not so as you watch the video and make your decision on investing In the company, i think what would be great if everyone could either comment simply left if you’re going to pass on the bumble, ipo or right if you’re interested in buying bumble stock. I always like to know what you guys in the community are thinking so getting back to the company bumble. Inc now offers two apps the traditional bumble, app that most are familiar with in the us, canada, australia and the uk in the badoo app, which is popular in latin america and europe. As far as popularity from a revenue perspective, bumble is the second highest grossing dating app in the world, according to sensor tower, with 12.3 million monthly active users as of september 30th, 2020.. The company also reports the bumble app experienced. Approximately 30 growth in the number of messages sent by women from the three months ended march. 30Th. 2019 to the three months ended september 30th of last year, while the app can be free to use. You can also pay for premium features that are meant to entice their users. Bumble offers premium tiers that, depending on what tier is purchased allows users unlimited, swipes the ability to undo swipes the use of super swipes to get a person’s attention.
The option to extend matches and connections after they expire allows the user to see who likes you right away, swipe outside of your home region. Turn your profile invisible and apply. Unlimited filters to your matches again. All features that try to move users to start paying for in their filing the company states that they had approximately 1.1 million bumble app paying users during the nine months ended september 2020.. Now badou is no slouch either as it’s the fourth highest grossing dating app in the world again, according to sensor tower, with 28.4 million monthly active users. As of september 30th, they report having had approximately 1.3 million badoo app and other paying users during the nine month. Saturday september 30th, so now, with those statistics in hand it’s time to take a look at how they translate towards the financials. Typically, i put up a chart to show these for you to see, but these financials are really hard to follow from the s1 because of how accounting was done over three reorganizations of the company’s ownership structure. Instead, i’ll share with you an excerpt from the filing that has the key financial data on your screen. You’Ll see that for the years under december 31st, 2018 and 2019, the company generated total revenue of 360.1 million dollars in 2018 and 488.9 million dollars in 2019. Representing year over year, growth of 35.8 percent breaking down the revenue between the apps bumble’s revenues grew from 162.4 million dollars to 275.
5 million dollars representing year over year. Growth of 69.7 percent, well, revenue from badoo and other sources grew at a slower rate of 7.9, with revenue in 2018 of 197.7 million dollars growing to 213.4 million dollars in 2019.. So, even though badoo has doubled the monthly act of users, the bulk of the revenue is generated from bumble also looking. At the same time period, the company had become profitable with bumble reporting a net loss of 23.7 million dollars in 2018 to net earnings of 85.8 million dollars in 2019 and then more recently, looking at the numbers from january 29th through september 30th. In those eight months, revenue came in at 376.6 million dollars, with 231.5 million of that, coming from the bumble, app and 145.1 million coming from the badoo app and other sources. If we could simply average that out over 12 months, which isn’t always apples to apples. But for discussion sake, total revenue would, or i should say, could come in at 565 million dollars ahead of fiscal year 2019 revenue by approximately 76 million dollars, which would actually be a slower rate of growth. Now, as to the overall net profit number, the company has gone back to showing a net loss of 84.1 million dollars from january 29th through september 30th, going from a profit to a loss, doesn’t sound good on the surface. However, the company did share that the net losses in the period were impacted by ownership, change, transaction cost of 40.
3 million dollars and by depreciation and amortization of 65.8 million dollars, as well as negative changes in assets and liabilities of 41.8 million dollars, also in the period. So if you instead looked at adjusted ebitda to exclude that the company generated 98.9 million dollars, which might give you a more accurate idea of the business operations before we start discussing the considerations for investing in the company let’s talk about details of the bumble ipo itself. The company plans to raise 1 billion dollars by offering 34.5 million shares at a price range of 28 to 30 dollars at the midpoint of the proposed range bumble, would command a fully diluted market value of 5.8 billion dollars, which is real close to the 6 to 8 billion value we estimated back in december. Of course, we know if there ends up being a lot of interest in the ipo. The company could upsize the offering or revise the price higher. So we’ll just have to see what happens. These things are always fluid right up until the ipo occurs as to, when is the bumble ipo date again. This could change too, but as of this recording we’re expecting the actual ipo to occur on wednesday and then bumble stock would start to trade on the public market on thursday february 11th under the ticker bmbl okay. So that gets us to thinking about if the ipo makes sense to invest in before i share my own thoughts, just a quick reminder that i’m, not a financial advisor or analyst, and while this video is meant to be informative, it should not be seen as a Recommendation for you to take any action based on my personal opinions, you should always do your own research or consult with your own financial advisor when making any investment decision got it got it alright.
So, aside from the financials and growth rate, two of the first things that i consider for a company going public are the growth of the market that a company is participating in and within that market. Who is the competition as to the market online dating continues to grow i’m old enough to remember when it was still new, and even though it was considered to be dangerous or desperate at the time i’m? Not ashamed to say that i had done it back in the day without any issues yep still alive nowadays, it’s, obviously very common and doesn’t have the negative stigma it had back then. But now the question is: is the size of the market fully realized, or is there room for more growth for some data on this? According to ocnc strategy consultants, the north american online dating market is projected to grow approximately 11 percent annually from approximately two billion dollars. In 2020 to approximately 3.4 billion dollars in 2025, and then the global market, which they were cleared to say excludes. China is projected to grow approximately 13 annually from approximately 5.3 billion dollars in 2020 to approximately 9.9 billion dollars in 2025.. According to their research, the primary drivers of market growth include a growing singles population and further penetration of online dating and increased monetization. This data just reinforces my own thoughts that there still is a growing market and a market that continues to grow into the everyday mainstream of society.
Now. The second consideration i mentioned is the competition and the big fish out there is match now i’ve shared in other videos and in live streams that i do own match stock and the reasons i bought into match was that, as i said, i believed in the market Opportunity, but also because they are the behemoth in the industry i mean, when you think of sites or apps like tinder, match.com, okcupid, plenty of fish, hinge, etc, etc, they’re all owned by match and many of those sites weren’t developed by match, but acquired by them. So the company was taking a proactive step to be the dominant company in the market and thereby widening their moat. In fact, back in 2017 there were multiple reports that match came, calling for bumble in order to acquire them as well, but bumble turned them down that led to a couple of years of litigation that was finally settled as of last summer. Now big picture assuming not much changes since i recorded this, although if it does as a shareholder, i hope it goes higher match is valued at a 42 billion dollar market cap and based on the trailing 12 months revenue. The price to sales ratio is around 17.. Keep that number in mind, because we’ll look at bumbles in a minute now, as of right now, bumble’s doing really well for themselves and found success in their created niche with their women make the first move mantra.
The bumble app is only behind tinder in popularity, although still behind, by a pretty significant margin. So when thinking about bumble, i think it could be a good company to own, particularly if you can get shares near or even a little over. The suggested pricing range. Looking at past revenues with the expectation of about a six billion dollar market cap, the suggested pricing appears reasonable at a price to sales ratio of around 12. Especially when we look at the market leader match who again has a price to sales of their own. Over 17., i feel, like bumble, has done a good job in creating and exploiting their niche and have some solid revenues they generated in a market, as we said that continues to grow the competition factor with match. Wouldn’T scare me off because of how well they competed against them. So far i mean if they end up becoming the preferred app of a whole gender demographic that’s, a significant demographic to own. Now, a consideration on the side of caution for both bumble and match is the low barrier of entry to the market, meaning that anyone that knows how to create an app and there’s a lot of smart people out there that do could potentially enter the market pretty Easily and further increase competition, but on the flip side the thing with dating apps is that people using them don’t only stick with using one at a time. They’Ll use quite a few to expand their eyes of finding what they’re, looking for whether that’s a long term relationship or whatever, not judging the key for bumble, will be the same for tender looking to continue to entice their users to pay for the premium tiers.
Then one other thing that’s always in the back of my mind, is if mass were to come, calling again for bumble at this point in time they would have to really pay up so, while i’m, not predicting. That would happen that wouldn’t hurt bumble stock at all. Looking back to last spring, i remember a couple of friends who knew i held match stock were telling me that they would be concerned how it might do during the pandemic. However, i wasn’t worried because of my thinking with fewer things to be able to go out and do and with people still being social in nature. I felt that the use of these apps would only go up. I mean, while you couldn’t go out on a date. You had all this free time by staying in maybe feeling alone, and you still could message people and if someone was on the fence about online dating this was an opportunity to give it a shot without the extra pressure of having to meet someone right away and At the end of the day, the data has basically shown that the pandemic only helped these dating apps. So to me, these dating app companies like bumble and match are both stay at home and back to normal stocks. Now anyone that’s watched me for a while knows. I won’t tell you what to do or what i expect the price to be, since i don’t have that ability to predict the future.
If i was born with that talent, i would definitely share that information with my community. The most i strive to do for you is pulling the information and try to share with you in an easy to understand manner and share some of my own thoughts on it and hope you find value in that at the end of the day. I always trust you to know what’s best for you to do with your money, based on your personal thoughts and situation. Now we wait to see where it’s priced and where it trades in the ipo market of 2021. Who knows where this will trade remember to? Let me know if you’re swiping left on the bumble, ipo or swiping right. I really want to know. I hope you enjoyed the video and found it helpful and if you did please push that like button comment on it and share with your friends on any of your social media sites and forums, you’re on it’s, really important and it’s a way for you to help Me grow the channel and the more it grows, the more resources i’ll put towards it and again, if you’re new to the channel or just an occasional visitor. I hope i want you over and you decide to subscribe and join the community. We’D love to have you on board with that.