It's been a wild ride for online dating specialist Bumble (BMBL 1.05%) since it became a publicly traded corporation in early 2021. The company was one of the more highly anticipated IPOs last year, but its shares have been southbound more or less ever since. Perhaps the challenging economic environment marked by supply chain issues and inflation isn't helping, but Bumble's financial results have sometimes been subpar.
However, the fact that Bumble runs one of the more popular online dating apps could allow it to turn things around eventually. With that as a backdrop, let's consider whether Bumble's stock is worth buying as the year ends.
Bumble's portfolio of dating apps
There are scores of online dating options, and many, including Bumble App, have adopted the famous swipe left/right model Tinder pioneered. In the case of Bumble App, that's not too surprising. The company's current CEO, Whitney Wolfe Herd, was the co-founder of Tinder. Further, Herd found a way to differentiate Bumble App from the pack by putting women in charge since only they can initiate conversations when matching with a member of the opposite sex.
Bumble has other dating platforms, including Badoo and Fruitz, both of which are particularly popular in Europe. The latter also seeks to set itself apart with its approach to dating. Users on the platform are assigned a fruit based on the kind of relationship they desire, which makes like-minded people easier to find.
Recent financial results
Although Bumble has several dating apps under its belt, its namesake platform is its most important, as the company's financial results routinely demonstrate. For example, in the third quarter, the company's total revenue increased by 17% year over year to $233 million, and Bumble App revenue jumped by an even more impressive 28% year over year to $181 million.
Here's another way to see Bumble App's importance. Total paying users on the platform came in at 2.1 million, 36% higher than the year-ago period. Badoo App and other paying users decreased by about 10% year over year to 1.2 million. According to management, the Badoo App targets users who are more sensitive to macroeconomic shocks, which explains why it has been struggling lately.
And there is also the war in Ukraine that has had somewhat of an effect on Badoo. But Bumble is making progress. Badoo App's total paying users slightly increased sequentially in the third quarter. The company thanked various new offerings on Badoo App for that, and it plans to continue rolling out new ones while doubling down on marketing.
Bumble also made progress on the bottom line in the third quarter. The company delivered a net income of $26.4 million, compared to the net loss of $10.4 million it recorded during the year-ago period. Overall, Bumble's financial results were solid.
On the right track
One of Bumble's biggest obstacles is competition from the larger Match Group. But there are excellent reasons for investors to be optimistic. Bumble could benefit from a solid network effect as it grows. The more users join the platform, the more people looking for love online will be attracted to it, making it more valuable in the long run.
Other prominent online dating specialists also benefit from the same network effect. Still, Bumble's boost should only get stronger over time, especially if it can stabilize Badoo App and start growing paying users again on the platform on a year-over-year basis. The company is looking to do just that. And Bumble App is likely to continue on its upward path, partly thanks to its women-centric approach.
If the economic troubles that have contributed to Bumble's poor recent performance on the stock market subside next year, Bumble's stock could soar. I'd wait until Badoo App gets out of its rough patch before rushing to buy Bumble's shares. But at any rate, the online dating specialist is on the right path and is worth keeping on investors' watch list.
