On Friday, Bumble Inc. (NASDAQ:BMBL) experienced a downgrade in stock rating from Buy to Hold by TD Cowen, accompanied by a significant price target reduction to $7.50 from the previous $22. The adjustment follows the company's second downward revision of its 2024 guidance.
The downgrade was prompted by expectations of year-over-year revenue declines for the Bumble app in the second half of 2024, linked to deteriorating trends among paying users. Despite acknowledging the positive nature of Bumble's product updates, the firm expressed concerns over the uncertain timing and extent of a potential recovery.
TD Cowen highlighted Bumble's lack of a diversified portfolio, which limits the company's ability to counterbalance slow growth with other brands.
The analyst's statement emphasized the challenges Bumble faces, noting, "We downgrade BMBL to Hold following management's second downward revision of '24 guide. We now expect year-over-year revenue declines for Bumble app in 2H24 on worsening paying user trends."
Additionally, the firm's skepticism regarding the impact of Bumble's product updates was clear. They remarked on the positive developments but also pointed to the uncertainty surrounding the recovery's timing and scale, as well as the company's singular focus, which does not allow for growth offsetting through other brands. Consequently, the price target was adjusted to $7.50.
In other recent news, Bumble Inc. reported a 3% increase in total revenue to $269 million in Q2 2024, driven by a 14% rise in paying users. However, the company expects a slight revenue decline in the third quarter and modest full-year growth. Despite this, Bumble's net earnings saw a significant increase to $38 million, up from $9 million the previous year, due to a 9% reduction in operating expenses.
KeyBanc has reduced its price target for Bumble, citing potential growth challenges. However, the firm maintained its Overweight rating on the stock. At the same time, Susquehanna downgraded Bumble's stock from Positive to Neutral due to concerns about the company's strategic overhaul. Citi also downgraded Bumble's stock from Buy to Neutral, following a disappointing outlook for the company.
BofA Securities has revised its stance on Bumble, downgrading the company's stock from Buy to Underperform and significantly reducing the price target. As part of its strategy to diversify its offerings and enhance customer experience, Bumble has acquired the community app Geneva.
InvestingPro Insights
In light of the recent downgrade by TD Cowen, it's worth noting that Bumble Inc. (NASDAQ:BMBL) has shown some positive financial signs according to InvestingPro data. The company's market cap stands at approximately $1.02 billion, and while the stock has experienced significant price volatility, with a 1-month price total return of -41.24%, InvestingPro Tips suggest that management's aggressive share buybacks and high shareholder yield could indicate confidence in the company's future. Additionally, Bumble is expected to grow its net income this year, which could be a positive signal for investors looking for a potential recovery.
Despite the challenges, Bumble operates with a moderate level of debt and has liquid assets that exceed its short-term obligations, providing some financial stability. The company's valuation implies a strong free cash flow yield, and it's trading at a low P/E ratio relative to near-term earnings growth, which could attract value investors. With a P/E ratio of 19.36 and a PEG ratio of just 0.12, the stock might be appealing to those who believe the company can surpass its growth expectations. It's also important to note that analysts predict Bumble will be profitable this year, having been profitable over the last twelve months.
For those interested in further analysis and additional InvestingPro Tips, there are 16 more tips available, which can provide deeper insights into Bumble's financial health and stock performance. To explore these tips and more detailed metrics, visit InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.