Shares of Bumble (BMBL +35.39%) went public on Feb. 11, 2021. Shares of the Austin-based online dating company roared 76% higher on the day of its initial public offering (IPO), giving it a valuation of $14 billion.
At the time of its IPO, the company's prospectus noted 40 million monthly users on its free-to-use Bumble and Badoo dating apps. Its "freemium" business model was a bet that by allowing users to send likes and messages to other profiles for free, the company would eventually grow its ranks of paying users by building brand trust and offering premium features to subscribers.
From Jan. 29, 2020, to Sept. 30, 2020, Bumble brought in $376.6 million in revenue, with $231.5 million coming from its Bumble app and $145.1 from Badoo. In that nine-month stretch, it reported a net loss of $84.1 million.
Image source: Getty Images.
Despite the net loss, there were encouraging signs. The company's Badoo app, launched in 2008, was profitable just two years later. The Bumble app, launched in 2014, began monetizing in 2016. And Bumble's paying users had grown to 1.1 million in the nine months ending Sept. 30, 2020, compared to 844 million the year prior.
So, what would $1,000 invested then be worth today?
In the five years since, shares of Bumble have tumbled 92.5% from its IPO price.
NASDAQ: BMBL
Key Data Points
After its IPO surge, shares lost momentum and slid downward over the next five years, closing at $3.24 per share last week. Anyone investing $1,000 at the IPO price would have owned 25.5 shares worth just $75 today.
While paying users across its apps hit 3.57 million as of its most recent earnings report, compared to 1.1 million in the months leading up to its IPO, that was a 16% decrease in paying users year over year. Total revenue decreased by 10% year over year. Bumble's painful slide over five years is a reminder of how risky IPOs can be and that the path to profitability laid out by executives and analysts is in no way guaranteed.
