Bumble (BMBL 0.08%) and Match Group (MTCH 2.05%) have a complicated and acrimonious relationship. Bumble's founder and CEO, Whitney Wolfe Herd, previously co-founded Match's flagship dating app, Tinder, with Sean Rad, Justin Mateen, and Jonathan Badeen.
But Tinder then stripped Wolfe Herd of her co-founder title. In response, she filed a sexual harassment and discrimination lawsuit against Tinder, which was settled for over $1 million.
In 2014, Wolfe Herd partnered with Andrey Andreev, the Russian founder of a dating app called Badoo, to launch Bumble as a female-first dating app. However, Tinder sued Bumble in 2018, claiming that Wolfe Herd stole trade secrets and violated its patents, and Bumble counter-sued. That war finally ended last June, with both companies settling all their litigation for undisclosed terms.
When Bumble went public this February, many investors wondered if it could become as big as Match -- which owns significantly more dating apps than Bumble. However, the market's enthusiasm for Bumble waned after its public debut, and the stock slipped below its IPO price of $43 per share in May.
But could Bumble still be a great growth stock for the next decade? Let's examine its future plans to see if it can match -- or even surpass -- Match Group's valuation by 2030.
Bumble has been growing faster than Match
Bumble's revenue rose 36% to $488.9 million in 2019, then grew 19% to $582.2 million in 2020. Bumble experienced slower growth in paid users throughout the pandemic, but it expects its revenue to grow 24%-26% in 2021 as the crisis ends and more people start dating again.
Match's revenue rose 19% to $2.1 billion in 2019 and grew 17% to $2.4 billion in 2020, and analysts expect its revenue to increase 22% this year.
Bumble and Match trade at 12 times and 15 times this year's sales, respectively. Bumble's bulls will likely argue that it should trade at a higher price-to-sales ratio than Match because it's growing faster.
But Bumble is also a lot smaller than Match
However, the bears will argue that Bumble needs to generate much stronger growth to justify a higher valuation, since it's a much smaller company.
Bumble's total paying users (on both Bumble and Badoo) rose 22% to 2.5 million in 2020, and grew 30% year-over-year to 2.8 million in the first quarter of 2021. Bumble hosted 1.35 million of those users, while Badoo served the remaining 1.45 million users. Bumble generates most of its revenue from its namesake app, which generates more than twice as much average revenue per user as Badoo.
Match's paid subscribers (across all its apps) rose 12% to 10.9 million in 2020, then grew 12% year-over-year to 11.1 million in the first quarter of 2021.
But what about the next 10 years?
The global online dating market could grow at a CAGR of 8.3% between 2019 and 2025, according to Allied Market Research. However, both Bumble and Match are likely growing faster than the broader market.
If Bumble grows its annual revenue at an average rate of 25% over the next five years, then maintains an average growth rate of 20% over the following five years, it could generate $4.4 billion in revenue by 2030. That growth trajectory, which would equal a CAGR of 22.5%, could be tough to achieve -- but Bumble still has plenty of irons in the fire.
The company could add more female-friendly features to Bumble, launch additional premium tiers, and monetize Bumble BFF, which is designed for platonic friendships, and Bumble Bizz, which hosts professional connections. That expansion beyond basic dating could turn it into a social network.
Bumble also launched voice and video calls two years ago, and it could further expand that platform to chase Zoom (ZM 2.06%) into the growing video conferencing market. Tinder only rolled out video calls a year ago. Like Match, Bumble could also eventually acquire other smaller dating apps to reach different demographics and overseas markets.
If Bumble generates $4.4 billion in revenue by 2030 and its stock still trades at 12 times sales, it could be worth about $50 billion. But it will still likely remain much smaller than Match, for a simple reason.
Even if Match grows half as quickly as Bumble, with a CAGR of 11.25% between 2020 and 2030, it would still generate nearly $7 billion in revenue by the final year. Assuming Match also trades at 12 times sales, it would be worth $84 billion. If it grows just a little bit faster, it could easily be worth $100 billion.
Look beyond the market cap comparisons
Simply put, Bumble is highly unlikely to be worth more than Match in ten years, even if it continues to grow at a much faster rate. But Bumble doesn't need to eclipse Match to be a good investment.
Its past growth suggests there's healthy demand for dating apps that let women make the first move, and those foundations could enable it to build other female-empowering social networking services in the future. Therefore, it could still be a promising growth stock to own for the next decade.